Employers added 4.8M jobs in June despite coronavirus, including 17.5K in accounting
Employers added 4.8 million jobs in June and the unemployment rate fell to 11.1 percent, according to the U.S. Bureau of Labor Statistics, a decline of 2.2 percentage points from the previous rate of 13.3 percent, as employees returned to work despite the ongoing spread of COVID-19. Accounting and bookkeeping services gained 17,500 jobs.
The report was much better than expected. Some economists had forecast gains of 3.23 million jobs. The BLS said Friday the “improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the COVID-19 pandemic and efforts to contain it.”
The BLS also revised upward the May job gains from 190,000, from 2.5 million to 2.7 million. However, it revised downward the April number by 100,000, from a loss of 20.7 million jobs to a loss of 20.8 million jobs. With those two revisions, employment in April and May combined was 90,000 higher than previously reported.
In June, employment in the leisure and hospitality industry rose sharply. The BLS also saw notable job gains in the areas of retail trade, education and health services, other services, manufacturing, and professional and business services. Professional and business services added 306,000 jobs in June, but employment was 1.8 million below its February level. Overall the job growth in June was strong, but with some caveats, especially as businesses in parts of the country that are seeing a resurgence of the novel coronavirus are once again shutting their doors or slowing their reopening.
“It was a really good number,” said Phil Noftsinger, executive vice president at CBIZ, a Top 100 Firm. “It beat expectations handily. The restaurant, accommodations and food services industry was obviously the big winner. Professional services firms, such as accountants, showed growth, but it was more nominal because probably most accounting firms such as CBIZ continued to work remotely so the furloughs there were not nearly so severe as some other industries. What that means more broadly, though, is that clients of accounting firms are reengaging. They’re going to need additional services related to filing their tax returns. Also, for the SMB market, they’re going to need their accountants related to the PPP loans, making sure they get those into a state of forgiveness. We’re seeing a lot of activity — a lot of tax consulting and business consulting — in that area. It’s a welcome response to the devastation we saw as a result of the shutdown.”
CBIZ’s monthly Small Business Employment Index found positive hiring trends among most industries. The accommodation and food services industry reported double-digit growth, and retail trade reported high single-digit growth. Real estate, arts and entertainment, and construction reported growth as well. The only industry that showed declines was the information industry. Small business hiring also grew in the majority of U.S. regions, according to CBIZ, generally reflecting the pace of reopening measures. Hiring increased most in the reopening Northeast (4.2 percent) and Central (2.27 percent) regions, while the Southeast, which mostly reopened in May, posted a 1.07 percent gain. The West, which largely opened later in June, was the only declining region (-1.68 percent).
Noftsinger sees some clouds on the horizon. “We’ve got 4.2 million rents in forbearance,” he said. “We still have a sizable unemployment rate for minority communities. Of course, you’ve got the coronavirus, where we will probably see shutdowns or at least pauses in reopening. The good news is the immediate bounce that we talked about months ago is happening.”
Rep. Richard Neal, D-Mass., who chairs the tax-writing House Ways and Means Committee, also sounded a note of caution: “Anyone who looks at these jobs numbers with glee either lacks an understanding of their context or is deliberately ignoring the grim reality our nation faces,” he said in a statement Friday. “I have said this repeatedly for months now: until we successfully address the public health crisis, our economy will not be able to bounce back successfully and jobs will not permanently return. These numbers reflect the re-opening of certain industries in some states that occurred in late May and early June. But along with the re-employment of temporarily laid-off workers, those preemptive re-openings had another major impact: a dismaying resurgence of COVID-19 cases and hospitalizations. This BLS survey data was collected prior to the new spike in virus cases, and thus does not account for all the re-closings of restaurants, bars and other places of business that have occurred since the end of June in response to increasingly dangerous conditions.”
Neal sees troubling trends in the jobs data. “We see a continued increase in permanent layoffs and long-term unemployment,” he said. "We also see disparities in unemployment along racial lines — the unemployment rates for Black Americans is 15.4 percent, Asian Americans is 13.8 percent, and Hispanic Americans is 14.5 percent. The U.S. economy has a long way to go before it escapes the COVID-19 recession, and all signs indicate that workers and their families are poised to endure many more months of joblessness and financial struggle. Yet under current law, emergency unemployment benefits are set to end on July 31. Americans cannot afford to lose this lifeline, which has kept them afloat and benefited the broader economy. More than a month ago, House Democrats voted to extend this assistance through the end of the year. To prevent even greater pain and suffering in our nation, the Senate must do the same.”
Senate Finance Committee ranking member Ron Wyden, D-Ore., also sees some signs of trouble. “Millions of Americans going back to work is good news, but the topline number in the jobs report masks ominous trends,” he said in a statement. “The report shows that only one-third of those who lost their jobs have gone back to work, and permanent job losses have increased. Importantly, the report shows the unemployment rate for Black men increased, as did the gap between the unemployment rate for Black and white workers. It also does not reflect the recent surge in coronavirus cases in Arizona, California, Texas and Florida, and the job losses resulting from bars, restaurants and other businesses closing their doors for a second time."
Like Neal, Wyden also insisted that enhanced unemployment benefits be extended, which allows up to $600 a week. “It would be unconscionable for Republicans to allow supercharged unemployment benefits to expire with the unemployment rate above 11 percent and 2.3 million new unemployment claims just this week,” said Wyden. “Our bill would tie unemployment benefits to market conditions to ensure workers can continue to pay their rent and buy groceries. Now is not the time to declare victory or take our foot off the gas. Millions of families and the broader economy will suffer tremendously if Republicans do not continue the aid that has kept 30 million families and the economy afloat the last four months.”