• US adds 4.8 million jobs and unemployment drops to 11.1% in June
  • Report data possibly stale, doesn't cover recent pause in reopenings
  • Initial jobless claims above 1 million for 15th straight week
  • Higher-wage hiring lagging as long-term economic uncertainty remains
  • Plateauing in recovery could suggest permanent job losses

Yesterday's PMI survey data from across the world had a common theme – employment continues to contract even as economies move towards stabilizing. This isn't surprising since unemployment is a lagging indicator, but the extent of damage and momentum can be gauged by how soon jobs return.

Today we learned that U.S. employers added 4.8 million jobs in June, which was at least one million more than the highest estimates. The unemployment rate fell to 11.1%, down from 13.3% in May, according to the BLS. While more than 15 million still remain unemployed as of February, the two-month trend is moving in the right direction, albeit with a long way to go. For the week ending June 27, initial claims was 1.4 million and continuing claims rose to 19.29 million.

Source: BLS
Source: BLS.

Here's some added perspective as you take in the data: 

Unemployment by race continues to paint an uneven picture of the economy:

  • Adult men: 10.2%
  • Adult women: 11.2%
  • Teenagers: 23.2%
  • Whites: 10.1%
  • Blacks: 15.4%
  • Hispanics 14.5%
  • Asians: 13.8%

In addition, the 11.1% unemployment rate may be worse than it looks. The Bureau of Labor Statistics recently explained that the rate was likely higher than reported in March, April, and May, and almost 5 million people were misclassified in the May report. Respondents said they had steady jobs despite not working any hours during the past week due to cancellations, postponements etc. They should have been counted as unemployed, and the rate should have peaked at 19.7% in April and been at 16.3% last month instead of 13.3%. The BLS says it is taking steps to correct the problem.

Today's report measures data from the week containing June 12 and is probably not showing the impact of re-closures underway across the country. Yesterday JPMorgan said its tracker of U.S. spending by a panel of 30 million Chase credit and debit cardholders "has pulled back noticeably from its recent highs. Thus far, the pullback appears surprisingly widespread across states & demographic groups." Also keep in mind those who aren't looking for new jobs are not counted as unemployed by the BLS.

JPMorgan spending tracker
Source: JPMorgan.

Online platforms are also providing us unique insight on where jobs are coming back the fastest. Jobs openings are staging a "fragile recovery" in sectors worst hit by lockdowns that are revving up, but not in those responding more to the economic recession than closures, according to Glassdoor's June 30 report. We saw a reflection of this in the recent ADP report.

Source: Glassdoor
Source: Glassdoor.

Job postings for higher-wage occupations are lagging, according to Indeed, which implies there is cautiousness about the economy long-term. "Lower-wage industries like retail and food service might adjust their workforces in response to month-to-month or even week-to-week changes in demand. But higher-wage industries like tech and finance might plan their headcounts based on what they expect demand to look like longer-term, in future quarters or years," wrote Jed Kolko, Chief Economist at the Indeed Hiring Lab. Also, look out for more signs that the labor crisis is disproportionately affecting minority groups.

Source: Indeed
Source: Indeed.

Homebase, a time-tracking software provider for small businesses, said more employees are working, but the recovery is slowing and there's been plateauing in some cities that suggests permanent closures on Main Street. Deep economic scarring of this sort and fiscal support lacking (PPP loans not being replenished/no more checks/no aid for state and local governments) are the biggest worries for the labor market at the moment besides a resurgence of the virus. Pay close attention to the number of people who say they have permanently lost their jobs