News: June Jobs Report Indicates Faster-Than-Expected Growth
Employment numbers exceed all estimates as we trend on the path toward a pre-pandemic economy.
Contributing Writer at Tally
July 23, 2021
The Department of Labor unveiled the June 2021 jobs report, and it was far better than anyone expected. For example, ADP predicted growth of 692,000 jobs, and the Dow Jones anticipated a 706,000-job growth. According to the official numbers, the U.S. nonfarm payroll employment grew by a healthy 850,000 jobs.
That’s 45.7% more growth than the government estimated in May, which was already upwardly revised. Does this mean the U.S. economy is back and the labor shortages are over? Let’s dive deeper into the June 2021 jobs report to find out.
Unemployment actually increased
In a twist, despite the massive employment growth in June, unemployment increased slightly.
The labor force participation rate remained steady at 61.6% in June, but the unemployment rate increased to 5.9% — a 0.3-percentage-point increase — to 9.5 million people. Such a slight shift in the unemployment rate isn’t enough to sound any alarms, especially in the face of significant overall growth.
The unemployment numbers look strong compared to the early pandemic era, where we saw 22.3 million lose their jobs in March and April 2020. Some theorized this growth might have something to do with states ending their increased unemployment benefits early, but with the complexity of the job market, it’s hard to pin growth on a single factor.
However, these numbers are still a far cry from business as usual, as the last pre-pandemic jobs report (February 2020) showed just a 3.5% unemployment rate, equating to 5.7 million jobless individuals.
As reported by CNBC, the “real unemployment rate” — a “separate figure that accounts for frustrated workers and those holding part-time jobs” — sat at 9.8% in June, a 0.4-percentage-point decrease. This was the first time since March 2020 this number fell under 10%.
Leisure and hospitality industries are roaring back
Of the 850,000 job gains, 343,000 were in the leisure and hospitality industries, and 194,000 were in the food services and drinking places sector. This growth may be driven by new demand created by the easing of COVID-19 restrictions and increased comfort with public spaces due to vaccinations.
Other leisure areas seeing big booms were arts, entertainment and recreation, which saw a 74,000-job increase in June.
The leisure and hospitality industries were among the hardest hit when the pandemic swept in last year, so they’re still in recovery mode, even with this significant growth. With these gains, the industry is still down 2.2 million jobs (12.9%) compared to the February 2020 numbers.
Other areas saw solid growth, too
The leisure and hospitality industries weren’t the only ones to see solid growth. Education, professional and business services, retail trade, social assistance and others saw employment jumps in June.
Their job increases are as follows:
Local government education: 155,000
State government education: 75,000
Private education: 39,000
Professional and business services: 72,000
Retail trade: 67,000
Other services: 56,000
Social assistance: 32,000
Wholesale trade: 21,000
Transportation and warehousing: 11,000
These are all impressive gains, but they’re still well below the pre-pandemic numbers.
Construction is a sore spot
Despite a real estate boom that has put incredible stress on new and pre-owned home inventory, construction was the only area that saw an employment decline in June.
According to the report, residential specialty trade contractor employment saw a healthy 13,000-job increase. This growth was offset by losses in civil engineering construction and nonresidential specialty trade construction jobs, resulting in 7,000 construction jobs lost in June.
Heading in the right direction
While the U.S. economy and jobs aren’t back to pre-pandemic levels, we’re making progress. The June jobs report indicates the market may be heading in the right direction.
As the number of vaccinated people increases and COVID-19 restrictions ease in many parts of the country, reports may improve to close to pre-pandemic levels. However, as our economy rebounds from an unprecedented period where entire business sectors were forced to shut down, it’s hard to predict exactly how soon full recovery may come.