U.S. Jobs: June Numbers Are Already Old News

The inherent danger in economic reports is the time that it takes to harvest, collate, analyze, and report on the data they reflect. This is painfully true for the latest efforts from the U.S. Bureau of Labor Statistics in their June Employment Situation Summary. It was released this morning — a day earlier than usual — in advance of the long Fourth of July weekend.

On the face of it, there's a lot to like about this report. The chief highlights are: 4.8 million jobs restored to the economy in June, and a decline in the unemployment rate to 11.1 percent. If it weren't for a recent spike in infection rates in the Sunbelt states and California, things might seem pretty rosy.

The still-unfolding COVID-19 "summer surge," alas, has unleashed a torrent of bad news. State governments are mandating the re-closing of bars, movie theaters, and various entertainment venues, while scaling back on restaurant occupancy rates — from 75 percent back to 50 percent here in my home state of Texas, for example.

The Canker in the Rose, the Worm in the Apple

First, let's start with the general context. By the end of April, as many as 37 million jobs had been lost due either to layoffs, or to full-time workers idled through furloughs. May's jump of 2.7 million jobs was a welcome reversal of those losses, just as June's 4.8 million is sure to help move things along in the right direction.

But that still leaves the job count down by as much as 29 million from its earlier peak, when unemployment hovered around the 3 percent mark. We still have a long, long way to go to get back to where we started. Recent political ads touting the biggest monthly job increase ever for May, 2020, conveniently ignore important background information.

What's enabling these recent jumps, alas, is the precipitous fall that preceded them. Here's a closer look at job gains for June, which show the following breakdown:

Leisure and hospitality: Up 2.1 million, or about 40 percent of overall job gains for the month. Note also that, even with this gain, the report discloses that "employment in food services and drinking places is down by 3.1 million since February."

Retail Trade: Up 740,000. This, along with the May gain of 372,000, is offset by losses of 2.4 million for March and April, so "employment in the industry is 1.3 million lower than in February."

Education and Health Services: Up 568,000, but still "1.8 million below February's level."

Other Services: Up 357,000, but still hurting: "Since February, employment in the other services industry is down by 752,000."

Manufacturing: Up 356,000, but still "down by 757,000 since February."

Professional and business services: Up 306,000, but "employment is 1.8 million below its February level."

Construction: Up 158,000. Add to that a gain of 453,000 in May, and you offset just over half of the 1.1 million construction jobs lost in March and April.

Transportation and warehousing: Up 99,000, against declines of 588,000 for April and May combined.

Wholesale trade: Up 68,000, but still "down by 317,000 since February."

Government: Up 33,000. The report cites job gains in local governments offset by losses at the state level and mentions that overall government employment is "still 1.5 million below its February level."

Mining: Down 10,000, and down by more than 123,000 overall since peaking in January 2019.

Other job categories, including IT employment's home sector of information, remain relatively unchanged.

COVID Inversely Mirrors the Economy

As infection rates rise and states clamp down on public activity, the economy dips. As infection rates slump and restrictions loosen, the economy strengthens. Right now, the virus is in ascendance. Thus, this report's good news offers, as NPR put it on July 2, a "snapshot of the economy that was already somewhat out-of-date as soon as it was issued."

That's because data for this June report was gathered in the middle of that month. The recent spike in infection rates throws at least some of the reported gains into question, if not into actual decline. This especially applies to the leisure and hospitality job gains and the retail trade job gains — public contact and interaction is essential to both.

Taking all of that into account, next month's report should be extremely interesting. Stay tuned!