According to last week’s Employment Situation Report released by the Bureau of Labor Statistics, U.S. employment gains in June shattered May’s historic record of employment gains for a single month.
Monthly Jobs Report
- Nonfarm employment increased by 4.8 million (SA) in June 2020, as more states advanced to phases 2 and 3, allowing for greater numbers of employees to return to work.
- The unemployment rate declined to 11.1 percent in June 2020, a 2.2 percentage point drop from May and down from 14.7 percent in April.
- The private sector added 4.767 million jobs, while government (all levels) added 33,000 jobs, reversing the 585,000 jobs lost in May.
- Eighty-nine percent of private sector job gains in June 2020 (4.263 million jobs) were in the service providing sector, while the goods producing sector added over a half million jobs (504,000).
- Job growth was led by some of the same service- sector industries that were most effected by the coronavirus pandemic: leisure and hospitality (2.088 million), trade, transportation and utilities (903,000), retail trade (739,800), and education and health services (568,000).
- Manufacturing added 356,000 jobs (but is down by 757,000 since February) and professional and business services added 306,000 jobs.
- The mining & logging industry was the only sector with job losses in June 2020, down 10,000 jobs. In May, four industry sectors realized job losses.
- Average hours worked decreased in June to 34.5 in June, 0.2 hours lower than May. However, they remain above April’s average and one year ago.
- In line with the reported gain in manufacturing jobs last month, the Institute for Supply Management reports their manufacturing Purchasing Managers Index (PMI) rose by 9.5 points to 52.6 in June.
- ISM’s manufacturing Employment index rose from 32.1 in May to 42.1 in June, while the New Orders index surged from 31.8 in May to 56.4 last month.
- According to Timothy R. Fiore, Chair of ISM’s Manufacturing Business Survey Committee, “June signifies manufacturing entering an expected expansion cycle after the disruption caused by the coronavirus (COVID-19) pandemic. Comments from the panel were positive (1.3 positive comments for every one cautious comment), reversing the cautious trend which began in March. The manufacturing sector is reversing the heavy contraction of April, with the PMI® increasing month-over-month at a rate not seen since August 1980, with several other indexes also posting gains not seen in modern times.”
Here's what some of the ISM survey respondents had to say:
- “Gradually ramping production back in our plants. Most of our supply base continued to operate during COVID-19, so we are not seeing a significant supply risk. Will be monitoring supply chain financial health closely.” (Transportation Equipment)
- “Thankfully, we are in quite a few industries, so impact wasn't as harsh on us and more stable. However, during the last two weeks, our bookings have grown, and supply seems to be more readily available.” (Fabricated Metal Products)
- “Market demand for refined products has increased as statewide quarantines have been lifted, but it is still below normal volumes.” (Petroleum & Coal Products)
- “Orders have picked up and are trending toward normal production requirements [volume similar to 2019 production].” (Plastics & Rubber Products)
- “We are seeing an increase in orders as the economy starts to get rolling again. Slow and steady, sales are increasing. So far, so good.” (Primary Metals)
- “Looks like May was the bottom in terms of orders. June is stronger, and our order books are rebuilding.” (Machinery)
- “Demand is down significantly due to COVID-19 but is starting to stabilize. We are hopeful for recovery in the second half of the year.” (Miscellaneous Manufacturing)
Source: Institute for Supply Management
Weekly Initial Unemployment Claims
- In contrast to the bullish monthly job gains, the Labor Department also reported last week that initial unemployment claims increased by 1.445 million for the week ending June 27 (NSA), down one percent from the previous week.
- The number of people claiming unemployment insurance in state programs totaled 17.9 million for the week ending June 20, up 1.5 percent from the previous week.
- There were 31.5 million people claiming benefits in all programs for the week ending June 13. This was an increase of over 900,000 from the previous week.
- Last but not least, the Census Bureau reported last week that the U.S. trade deficit widened to $54.6 billion in May, up $4.8 billion from the revised $49.8 billion in April
- Exports in May were $144.5 billion, $6.6 billion less than April exports.
- Imports in May were $199.1 billion, $1.8 billion less than April imports.
- The U.S. deficit in goods widened by $4.2 billion to $76.1 billion while the services surplus narrowed by $0.6 billion to $21.5 billion.