Jobs Report and the Monthly Employment Growth Statistics
Why 2.7 Million Jobs Were Gained in June
The U.S. economy gained 2.699 million jobs in June 2020, according to the U.S. Bureau of Labor Statistics (BLS). That's after losing a record 20.787 million jobs in April. Businesses began reopening after closing in April to slow the spread of the COVID-19 pandemic. Prior to the pandemic shutdown in March, the economy was adding around 200,000 jobs a month.
The economy needs 150,000 new jobs each month to keep expanding. As you can see from the chart below, current job losses far exceed the worst of the Great Recession. For that reason, it is likely that the U.S. economy has entered a new recession.
Where Jobs Were Added
Leisure and hospitality added 2.088 million jobs in June after losing 7.575 million in April. The sector typically adds from 20,000 to 30,000 positions a month. Bars and restaurants reopened to limited seating. Restaurants had been restricted to take-out only.
Health care and social assistance added 474,900 jobs in May after losing 2.1 million jobs in April. Hospitals began offering elective procedures that had been canceled to make way for COVID-19 patients. As a result, many non-essential health care workers were laid off. Normally, this sector adds over 30,000 jobs a month. It remained a strong performer even during the recession.
The retail industry added 739,800 jobs in May after losing 2.3 million jobs in April. Shoppers were told to avoid any stores except essential services, such as groceries and drug stores. Wholesale, which usually trends with retail, added 67,600 jobs.
The pandemic has damaged a weakened retail sector. Store managers have been slashing jobs since March 2017. Online sales have cut into bricks-and-mortar store sales. That's been especially true during shelter-in-place.
Temporary help services added 148,900 jobs. Companies add temporary workers when they aren't sure they will need permanent positions. That's especially true during the early stages of a recovery.
Transportation and warehousing added 98,700 jobs.
The government added 33,000 positions. Information services added 9,000 jobs. This sector, especially Silicon Valley, is critical to American global competitiveness.
Financial activities added 32,000 jobs. Banks continue to function, but limited the number of people in branch offices. Even before the pandemic, banks had been adding fewer positions as the Fed lowered interest rates. Lower rates reduce profitability to lenders because they must charge less for loans.
Where Jobs Were Lost
The mining industry, which also includes the oil industry, lost 10,000 jobs. That's due to a drop in oil prices. Excess supply from U.S. shale oil producers has lowered prices. OPEC limited its output. As a result, future oil prices are expected to remain subdued.
Utilities lost 3,200 jobs.
The U.S. Jobs Report Explained
The monthly jobs report is also called the "Employment Situation Summary" and the "Non-Farm Payroll Report." It's a critical economic indicator because it's the first report of the month. It's also the most comprehensive and credible.
The Bureau of Labor Statistics surveys 160,000 non-farm businesses and agencies on the number of jobs, the wages paid, and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours, and how fast salaries are increasing.
The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers' age, sex, and race/ethnicity. The household survey has a more expansive scope than the establishment survey. It includes the self-employed, unpaid family workers, agricultural workers, and private household workers. They are excluded by the establishment survey.
The household survey is not as accurate as the business establishment report, though. It has a smaller sample size. That's why employment numbers are taken from the establishment survey. So the current unemployment statistics often show a different trend than the jobs report.
Other Jobs Reports
There are two other jobs reports. The monthly ADP National Employment Report® is released on the first Wednesday of each month. It's produced by the ADP Research Institute, SM, and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming, as does the BLS report. But more importantly, it also excludes government jobs, which are included in the BLS report. For that reason, it's considered incomplete.
The ADP Report is useful because it's released the Wednesday before the BLS report.
It gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it's not intended to be predictive. Like the BLS report, it's revised as more data comes in later in the month. These revised numbers are 96% correlated with the revised BLS jobs report.
The Department of Labor also releases a weekly jobless claims report. This measures the claims for initial unemployment benefits reported by each state every week. It also says how many of the unemployed are still receiving benefits. This report gives an indication of trends, whether there are more or less of the unemployed than the week before.
The main value of this report is that it is weekly and so it gives some idea of trends between the monthly jobs reports. It isn’t accurate when predicting the monthly report because it is volatile.
Bureau of Labor Statistics. "Employment Situation Summary," Table B. Accessed July 2, 2020.
Bureau of Labor Statistics. "Employment Situation Summary," Table A. Accessed May 8, 2020.
ADP Research Institute. "National Employment Report," Accessed May 8, 2020.
U.S. Department of Labor. "News Release," Accessed May 8, 2020.