Job Growth Heats Up in June, Adding 850,000 to Payrolls

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The jobs market recovery started summer hot as hiring grew the most in 10 months in June, keeping hope alive that a more-rapid rebuild might be just around the corner.

Key Takeaways

  • The U.S. economy added 850,000 jobs in June, more than economists’ expectations and the largest monthly growth since last August.
  • Payrolls are now 6.8 million below where they were in February 2020, before the pandemic.
  • The unemployment rate ticked up to 5.9% from 5.8% in May, with slightly more people reporting they lost a job last month.
  • June’s report is reason to be optimistic about the state of the labor market, economists say.

The U.S. economy added 850,000 jobs last month, beating economists’ forecast of 690,000, seasonally adjusted government data released Friday showed, a positive step for the labor market after smaller-than-expected growth in April and May. The leisure and hospitality industry added 343,000 people to their payrolls, accounting for most of June’s jump as consumer demand for experiences outside the house swelled amid fewer pandemic restrictions. Government added 188,000 workers, mostly at public schools. The monthly growth in June was the largest since the labor market added 1.6 million people to payrolls last August.

The number of people on payrolls is now 6.8 million below where it was in February 2020, before the pandemic caused the economy to shed 22.4 million jobs in a few months. After an initial burst of hiring last summer, the jobs market has mostly settled into gradual improvement this year, adding at least 200,000 jobs every month in 2021. June’s growth increases the pace of the recovery, with the job market on track to hit pre-pandemic levels next June at the current rate.

“There’s quite a bit of damage left to repair, but today’s report suggests that we may rebuild sooner rather than later,” wrote Nick Bunker, economic research director at job search website Indeed, in a commentary.

Expectations for labor market growth skyrocketed earlier this year as the economy began to awaken from the pandemic. Gross domestic product surged 6.4% in the first quarter on the back of stimulus-fueled consumer spending, and prices have shot up as businesses strain to keep pace with demand. That led to continuing expectations that a hiring boom would occur as businesses ramp up, with some economists predicting the economy would add 1 million jobs per month throughout the spring and summer. 

Those predictions haven’t come true—at least not yet. Businesses have a record number of open positions and have turned to increasing wages and offering perks like signing bonuses to lure workers to fill them. This has created a market where workers have the upper hand for now, with more people quitting their jobs—or considering it—amid plentiful options. 

The unemployment rate ticked up, to 5.9% from 5.8% in May, with slightly more people reporting they had lost a job in June. But some economists say June’s payroll numbers are reason to be optimistic about the state of the labor market, with at least one believing the million-jobs-a-month mark is still attainable. 

“Today's report shows the economic recovery accelerating and broadening,” wrote Julia Pollack, labor economist at jobs website ZipRecruiter, on Twitter. “With labor force participation likely to rise in the late summer and fall, we could actually get the one-million-plus figure for which we've all been hoping.”

Have a question, comment, or story to share? You can reach Rob at ranthes@thebalance.com.