A total of 4.8 million new jobs were created in the United States during June, a figure that exceeds expectations of 2.4 million and allows the second consecutive drop in the unemployment rate to 11.1%. However, as much as the panorama offered by the Bureau of Labor Statistics excites the market, several experts call not to claim victory ahead of time.
The caution they call is not easy, considering that, as in the May report, it was sectors severely hit by the quarantines that showed the strongest improvements. In particular, leisure and accommodation represented the biggest leap in job creation, registering 2.1 million new jobs, which represents approximately 40% of total growth.
Additionally, as JPMorgan noted in its report on the subject, “this took place along with a good increase in labor force participation, since 61.5% of adults had a job or were looking for one last month, compared to 60.8% in the previous month ”.
However, the same entity highlights that “the second wave of the virus (or the first stubborn wave) has raised doubts about whether this can be sustained. Those doubts were reinforced by today’s unemployment claims report for the week ending June 27, which was once again higher than expected at 1.4 million. ”
Indeed, although a separate report by the Department of Labor noted a new slowdown in the rise in orders for such insurance, the trend of stabilization in a weekly destruction of around 1.5 million jobs is also notable. job.
In this context, Chris Rumpkey, MUGF’s chief financial economist in New York, poses the dilemma of who to believe, the Bureau of Labor Statistics or the Department of Labor. In this context, he concludes that “today’s report of 4.8 million jobs that will be back online in June may be the calm before the storm, because more than two thirds of the states were closing again at the end of the month after the second wave of the coronavirus pandemic. “
In a similar vein, Sam Bullard, senior economist at Wells Fargo, while acknowledging that “overall the unemployment report is certainly encouraging,” it is difficult for the improvement to be sustainable.
From his point of view, the reimposition of the restrictions to contain the coronavirus in the southwestern part of the country, which is precisely the one that showed the most forceful improvements, because its rapid reopening will mean that “we are not going to see the level to improve the US labor market in May and June during the coming months. “
In any case, although the future outlook looks uncertain and will be determined by the evolution of the pandemic, Bullard estimates a reduction in the unemployment rate in the medium term. According to its estimates, its decrease would reach 9.9% at the end of the third quarter, while at the end of the year it would drop to 7.7%.
–
