American companies create record 4.8 million jobs in June

The U.S. economy created jobs at a record pace in June as companies hired more staff after the coronavirus recession.

Payroll rose 4.8 million, the most since the Labor Department began keeping records in 1939, helped by the reopening of factories and restaurants.

It follows the rebound in jobs in May, when 2.5 million joined the job market, and comes after consumer spending data saw a jump in activity.

But a recent spike in Covid-19 cases has raised fears for continued growth.

The June increase is far in excess of the 3 million jobs that many economists predicted would be created last month.

However, separate Labor Department data also showed that in the week ending June 27, initial jobless claims fell only slightly, to 1.43 million, in the prior week.

Oxford Economics called it a “worryingly small decline”.

The companies, even in populated states like California, Florida and Texas, plan to reduce or delay the reopening due to new outbreaks of coronavirus, which would delay hiring.

This week, Federal Reserve Chairman Jerome Powell acknowledged the pickup in activity and said the economy had “entered a new important stage.” But he cautioned that continued growth would hinge on “our success in containing the virus.”

And despite two consecutive months of job growth, employment is still about 15 million below its pre-pandemic level, with an unemployment rate just above 11%.

The US Department of Labor said the leisure and hospitality sector added more than 2 million jobs and retail added 740,000.

Resuming routine medical appointments also helped as health care employment increased 568,000. The reopening of factories meant manufacturing employment continued to rebound, increasing by 356,000, driven primarily by a 195,000 increase in the auto industry.

The increase in job creation in the past two months has been driven by the government’s Paycheck Protection Program, which provides loans to companies that can be partially forgiven if used for wages. But those funds are running low.

Michael Pearce, a senior US economist at Capital Economics, said he expects “the recovery from here will be much more uneven and job growth will be much slower on average.”