AP Explains: 5 key takeaways from a strong June jobs report

WASHINGTON (AP) — At first glance, the June employment report was a blockbuster.

The U.S. economy produced a record 4.8 million added jobs last month, walloping expectations. And the unemployment rate sank from 13.3% all the way to 11.1%.

“Today’s announcement,” President Donald Trump declared Thursday after the report was released, “proves that our economy is roaring back.”

Maybe. But most economists warn that the risks ahead outweigh the reasons to cheer as the economy and the job market struggle to emerge from a devastating meltdown triggered by the coronavirus.

Further hiring gains are imperiled by a resurgence of COVID-19 cases throughout the South and West. And despite a solid rebound in employment, the job market remains badly damaged — by the pandemic itself, by the lockdowns imposed to contain it and by a loss of confidence among Americans fearful of returning to shops and restaurants until a vaccine or an effective treatment for the virus is available.

Even after superb hiring reports for May and June, the economy has regained only about one-third of the 22 million jobs it lost to the pandemic recession, according to Thursday’s jobs report. And the unemployment rate still exceeds the highest rate during the 2009-2009 Great Recession.

Here are five major takeaways from a jobs report that was surprisingly robust yet may not fully reflect a fast-evolving employment market.


Just as the economy seemed to be gathering momentum after springtime lockdowns of businesses, confirmed virus cases began resurging throughout the South and the West. The spike in cases forced state and local governments that had allowed many businesses to reopen to suddenly suspend or reverse those plans.

Many bars and restaurants, newly reopened in late May and early June, shut down again and laid off workers — again. The June report didn’t include those job cuts.

“Remember that the (June jobs) data are capturing the data from the middle of May through the middle of June, given the survey period,” economists at Bank of America Global Research cautioned. “It captures the state of the labor market before the economy was hit by the rise in virus cases in the Sun Belt.”

Researchers who track business activity in real time have detected evidence of a slump. Homebase, a provider of time-tracking software for small businesses, discovered that the number of hours worked at its client companies has leveled off after having risen sharply in May and early June.

Likewise, the data firm Womply found that the proportion of bars that are closed in Texas, Florida, Tennessee and some other states grew last week after having declined steadily since April or early May.

What’s more, the government reported Thursday that the number of laid-off Americans seeking unemployment benefits last week remained at an elevated pace — 1.43 million, down slightly from the previous week but alarmingly high by historical standards.

“With the number of COVID-19 cases accelerating and some states delaying re-opening or imposing new restrictions, we are concerned that a significant number of individuals may become furloughed again, “Jay Bryson, chief economist at Wells Fargo Securities, wrote in a research report. “The outsized gains in payrolls that were registered in May and June likely won’t be repeated in the next few months.’’


Despite the April-May bounce-back, the employment market remains in dire shape: 137.8 million Americans were working in June — 14.7 million fewer than in February, before the pandemic began to inflict deep economic damage. Even May’s 11.1% unemployment rate was the third-highest, behind April and May, in monthly records that go back to 1948.

And the vast majority of May’s job gains appeared to come from businesses that had recalled employees who were provisionally let go during the virus lockdowns: The number of Americans on temporary layoffs sank by a record 4.8 million last month.

Ominously, by contrast, the number of people labeled “permanent job losers” surged by 588,000 last month. That was the biggest such jump since February 2009, in the depths of the Great Recession. These people will likely find it more difficult to regain employment.

Joe Biden, the presumptive Democratic presidential nominee, denounced Trump for declaring what Biden said was a premature victory over job losses:

“President Trump has spiked the ball and made this about him. He doesn’t seem to realize he’s not even on the 50-yard line.”


White workers continue to fare better than Black workers.

In June, the jobless rate for white Americans fell from 12.4% in May to 10.1%. For African Americans, the rate dropped less, from 16.8% to 15.4% Historically, the unemployment rate for Black workers has been 1.5 to 2 times the rate for white workers.

That gap had narrowed in the early stages of the pandemic because African Americans work disproportionately in many front-line jobs in warehouses, grocery stores and takeout eateries. Such businesses were generally regarded as “essential” and so managed to retain most of their employees.

But in the past couple of months, the racial gap has widened again.

“The pandemic has really shone a spotlight on how lopsided our economic system is, particularly in terms of the labor market,” said Steve Rick, chief economist at the insurer CUNA Mutual Group. “It’s clear that Black communities have been disproportionately affected by this recession.”


Average hourly earnings at private companies fell 1.2% to $29.39 in June. For rank-and-file workers specifically, hourly earnings dropped 0.9% to $24.74.

The reason wasn’t so much that employers imposed pay cuts. Rather, the workers who were rehired in June, at bars, restaurants and other such establishments, disproportionately work in lower-paying occupations. That trend pulled down average wages for the month.

“The decline reflects the extent to which June’s job gains were skewed toward lower-wage, lower-hour industry groups, such as retail trade and leisure and hospitality services,” said Richard Moody, chief economist at Regions Financial.

A job-quality index produced by Cornell University’s law school found that nearly 87% of June’s growth in private sector hiring came from “low quality’’ jobs — non-management positions that offer below-average weekly earnings.


Employers were hiring all over the economy last month.

Restaurants, bars, hotels and other leisure and hospitality businesses, hard hit by closures in the spring, added 2.1 million jobs in June. Even so, they employ 4.8 million fewer people than they did in February.

Retailers added 740,000 jobs, health care 475,000, manufacturers 356,000 and construction firms 158,000.

“Job gains in June were broad-based across 75% of the private sector,’’ noted Kathy Bostjancic of Oxford Economics.


AP Economics Writers Martin Crutsinger and Christopher Rugaber contributed to this report.