WASHINGTON (AP) — United States (US) unemployment fell to 11.1 per cent in June as the economy added a solid 4.8 million jobs, the government reported on Thursday. But the job-market recovery may already be faltering because of a new round of closings and layoffs triggered by a resurgence of the coronavirus.
While the jobless rate was down from 13.3 per cent in May, it is still at a Depression-era level. And the data was gathered during the second week of June, just before a number of states began to reverse or suspend the reopenings of their economies to try to beat back the virus.
“This is a bit of a dated snapshot at this point,” Economist Jesse Edgerton at JP Morgan Chase said.
The news came as the number of confirmed infections per day in the US soared to an all-time high of 50,700, more than doubling over the past month, according to the count kept by Johns Hopkins University.
The spike, centred primarily in the South and West, has led states such as California, Texas, Arizona and Florida to re-close or otherwise clamp down again on restaurants, movie theatres, beaches and swimming pools, throwing some workers out of a job for a second time.
US President Donald Trump said the jobs report shows the economy is “roaring back” though he acknowledged there are still areas where “we’re putting out the flames” of the virus.
Democratic presidential candidate Joe Biden responded, “Just like last month, President Trump spiked the ball and made this about him. He does not seem to realise he’s not even on the 50-yard line.”
Economists expect the recovery to take longer than Trump’s optimistic projections, with the unemployment rate likely to be near double-digit levels by year’s end.
“Even as we move into the second half of the year, a large number of people will still be looking for work,” Senior US Economist Eric Winograd at Asset Manager AllianceBernstein said.
The shutdowns over the past two weeks will be reflected in the July unemployment report, to be released in early August.
While the job market improved in June for a second straight month, the Labor Department report showed that the US has recouped only about one-third of the colossal 22 million jobs lost during the lockdowns this spring.
Layoffs are still running high: The number of Americans who applied for unemployment benefits fell only slightly last week to 1.4 million, according to the government. Though the weekly figure has declined steadily since peaking in March, it is still extraordinarily large by historic standards.
And the total number of people drawing jobless benefits remains at a sizable 19 million.
US job growth in June was driven mainly by companies recalling workers who had been laid off during the widespread business shutdowns across the country.
In an ominous trend contained in the Labor Department report, the number of Americans who said they lost their jobs permanently rose by 600,000 last month to nearly 2.9 million.
Many businesses, particularly small ones, are shutting down for good even though the lockdowns have largely been lifted.
Economics professor at the University of Chicago Erik Hurst said many restaurants and gyms cannot survive by operating at half-capacity, and customers are going to be cautious until there is a vaccine. “We don’t want to get our hair cut as much as we used to,” Hurst said. “We don’t want to go out to eat as much as we used to.”
Fred Wellman’s five employees got their final paycheques yesterday as he closes down his public relations firm, ScoutComms. He was able to get a small-business loan from the government, but it was not enough.
He usually drums up most of his business at conferences, seminars and other in-person events. But “if people aren’t meeting in person, if people aren’t holding events, you don’t get a chance to mingle,” he said.
The job gains of the past two months have partly resulted from unprecedented levels of government spending, including USD1,200 relief cheques, more than USD500 billion in grants to small businesses, and an extra USD600 a week in unemployment benefits.
Those payments enabled millions of Americans to cover the rent and other bills. Yet those programmes are expiring or tailing off. The additional USD600 in unemployment ends on July 31.