WASHINGTON (AP) – American employers likely re-hired several million more workers in June, thus reducing the unemployment rate to the depression level, but the most up-to-date data suggests that a resurgent coronavirus will limit more earnings.
Economists have forecast that businesses, governments and nonprofits added 3 million jobs, a record, and that the unemployment rate fell a full percentage point to 12.3%, according to data provider FactSet. The expected hiring profit would increase 2.5 million jobs In May. Still, combined job growth for May and June would only regain a fraction of the 22 million jobs lost in March and April, when the virus forced businesses to close and layoffs across the country.
And even an unemployment rate above 10% would not fully capture the extent of the pandemic’s damage to the labor market and economy. Millions more people work part time, but would prefer to work full time. And an unusually high proportion of workers have been subject to wage cuts, according to research. has found.
With confirmed cases of coronavirus shooting up through the Sun Belt, a variety of evidence suggests that an incipient recovery is stagnating. In states that are experiencing the sharpest spikes in reported virus cases (Texas, Florida, Arizona, and others), progress has been reversed, with business closings and job losses for workers, in some cases by second time..
On Wednesday, California closed again covered bars, theaters and restaurants in most of the state. And the Arizona outbreak became more severe in almost every measure. Florida has closed some beaches.
Credit and debit card data tracked by JPMorgan Chase shows that consumers have cut back on spending last week, after spending has steadily increased in late April and May. The reversal has occurred both in states that have seen sudden increases in reported COVID cases and in less affected states, said Jesse Edgerton, economist at JP Morgan.
Nationwide, card spending fell nearly 13% last week compared to the previous year. That was worse than the week before, when card spending year-over-year had decreased by just under 10%.
Homebase real-time data, a provider of time tracking software for small businesses, shows that the number of hours worked at its client companies has stabilized after increasing significantly in May and early June. Business reopens have also been flattened. The economic rebound produced by the initial lifting of closing orders may have run its course.
Still, Thursday’s jobs report will be based on data collected in the second week of June, so it will likely reflect an improved hiring trend. Last week’s plateau in hours worked will affect July’s employment numbers, to be released in early August.
“Whatever image the jobs report gives us, things have gotten worse since then,” said Julia Pollak, labor economist at ZipRecruiter.
In addition to renewed closings across the Sun Belt, New York City has postponed plans to reopen restaurant seating in the face of more confirmed virus cases. Such moves are causing another round of layoffs. or will limit future hiring.
McDonald’s has halted its reopening efforts across the country. And Apple said it will re-close 30 more stores in the US, in addition to 47 it had already closed a second time.
Economists have long warned that the economic benefits of allowing companies to reopen would be short lived if the virus was not controlled. Until most Americans feel safe enough to dine, travel, shop, or congregate in groups without fear of infection, restaurants, hotels, and shops won’t be in enough demand to justify rehire all of their former workers.
“The way forward for the economy is extraordinarily uncertain and will depend largely on our success in containing the virus,” Federal Reserve Chairman Jerome Powell told a House committee this week. “A full recovery is unlikely until people are sure that it is safe to re-engage in a wide range of activities.”
Still, some bright spots in the economy may emerge in Thursday’s jobs report. Manufacturers expanded in June after three months of contraction, the Institute for Supply Management, a trade group, said on Wednesday. New orders are coming in and factories are adding more jobs, ISM said.
And record low mortgage rates are encouraging more home buyers. New home purchases increased sharply in May. And a measure of contracts signed to buy existing homes skyrocketed by a record amount in May, a sign that sales should pick up after falling for three straight months.
.
