The nation’s labor market bounced back in June after lackluster hiring in April and May, with employers adding 850,000 new jobs, according to the U.S Bureau of Labor Statistics.
The jump in employment marked the largest influx of jobs since August 2020, and while a long road ahead still remains in the country’s labor recovery, June’s turnaround was a welcome improvement.
“A faster rate of job growth in June, which followed slower than expected growth in April and May, leaves the economy still 6.8 million jobs short of where it was in February 2020,” said Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association. “However, the economy is certainly headed in the right direction. The country’s reopening is challenged by supply chain constraints and worker shortages in certain sectors, but we expect robust job growth to continue.”
The supply of workers remains a key barrier to a bigger payroll recovery, with COVID-19 concerns, resurgent childcare issues and a rethinking of appropriate wages and benefits among the factors holding back the workforce. But June’s report revealed that some of those constraints may be moderating somewhat: The labor force grew by 150,000, and while the participation rate was unchanged at 61.6 (it has stayed between 61.4% and 61.7% since last June), Wells Fargo economists Sarah House and Shannon Seery noted a jump in participation rate among prime-age workers (25-54 years old).
With more and more of the country reopening as the summer rolls on, the services industries — many of which were battered by job losses as the pandemic tore into in-person sectors — saw a big June rebound. Leisure and hospitality businesses added 343,000 jobs to their payrolls, while retail added another 67,000. Employment in leisure and hospitality remains down by 2.2 million from February 2020, while retail is down 303,000 jobs during the same timeframe; still, big hiring numbers in the two sectors suggest an ongoing rebound is in the works.
“With respect to the housing market, while total construction employment declined, this was due to a decrease in the non-residential components,” observed Fratantoni. “There were an additional 15,000 jobs in residential construction, which should benefit the pace of homebuilding. Insufficient housing inventory levels continue to slow what should be a stronger pace of home sales.”
As for the unemployment rate, the headline figure inched up to 5.9%, but according to Fratantoni, “it is important to note a few changes in the details.”
For one thing, fewer workers reported working part-time for economic reasons, suggesting that they may now have full-time jobs. And the number of workers reported as “job leavers” grew, lining up with the higher quit rate seen in other data.
“There is a fair amount of churn in the job market right now as workers seek the best match,” Fratantoni said, “moving to jobs and sectors that are paying more due to the severe shortages in some segments of the job market.”