New jobs were created by companies in the American economy in the month of June at a record pace as companies hired more people following relaxation of novel coronavirus pandemic related restrictions.
With addition to 4.8 million payroll jobs in the month, June marked the highest increase in the number of monthly jobs to the United States economy since records have started to be kept for the same by the Labor Department in 1939. The reopening of factories and restaurants were the drivers for this growth.
In the previous month of May there was a rebound in the US job market with 2.5 million new jobs created. The June job data came on the back of data showing a rise in consumer spending I the largest economy of the world.
However analysts have raised concerns about the sustainability of this growth because of a recent spike in Covid-19 cases in the country.
The increase in the creation of new jobs was much higher than the estimates of analysts and economists who had expected addition of about three million jobs in June.
However there has only been a slight drop in unemployment claims, to 1.43 million in the week ending June 27 on the previous week, according to a separate set of data released by the US Labor Department.
Oxford Economics called it a “worryingly small decline”.
The fresh novel coronavirus outbreaks could hit new hiring growth in including in populous states such as California, Florida and Texas, as companies are being forced to scale back or delay reopening.
Acknowledging the rebound in activity, Federal Reserve chairman Jerome Powell said this week that the economy had “entered an important new phase”. But the continuing growth would depend on “our success in containing the virus”, he warned.
And with the jobless rate just above 11 per cent, employment is still about 15 million below its pre-pandemic level despite two months in a row of jobs growth.
More than two million jobs were added by the leisure and hospitality sector while another 740,000 jobs were created in the retail sector, said the US Labor Department.
The employment in the healthcare sector rose by 568,000 because of the resumption of routine medical appointments. There was also continued rebound in employment in the manufacturing with a rise of 356,000 new jobs because of the reopening of factories, and majorly driven by the car industry.
The government’s Paycheck Protection Program, under which businesses loans are granted that can be partially forgiven if used for wages, helped in the growth in job creation in the past two months. But those funds are drying up
He expects “the recovery from here will be a lot bumpier and job gains far slower on average”, said Michael Pearce, senior US economist at Capital Economics.
The June jobs surge was “bittersweet”, said Moody’s Analytics economist Sophia Koropeckyj, because the growth in the number of cases was “diminishing the likelihood of a continued V-shaped recovery”.
She “expects that the rebound in employment will fizzle and payrolls will flatten out until a vaccine is widely available”.
(Adapted from BBC.com)