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U.S. Employment Spikes By 4.8 Million Jobs In June, Much More Than Expected

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After reporting an unexpected jump in employment in the U.S. in the previous month, the Labor Department released a report on Thursday showing another record spike in employment in the month of June.

The report said non-farm payroll employment skyrocketed by 4.8 million jobs in June after soaring by an upwardly revised 2.7 million jobs in May.

Economists had expected employment to surge up by about 3.0 million jobs compared to the spike of 2.5 million jobs originally reported for the previous month.

The Labor Department noted the improvement in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain it.

However, the combined jump of 7.5 million jobs seen over the past two months has only partly offset the combined nosedive of 22.2 million jobs seen in March and April.

"The 4.8 million rise in non-farm payrolls in June provides further confirmation that the initial economic rebound has been far faster than we and most others anticipated," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "But that still leaves employment 9.6% below its February level and with the spread of the virus accelerating again, we expect the recovery from here will be a lot bumpier and job gains far slower on average."

The bigger than expected increase in employment in June was partly due to a spike in employment in the in leisure and hospitality industry, which soared by nearly 2.1 million jobs.

Notable job growth was also seen in retail, education and health services, other services, manufacturing, and professional and business services.

The Labor Department also said the unemployment rate dropped to 11.1 percent in June from 13.3 percent in May. The unemployment rate had been expected to dip to 12.3 percent.

The decrease in the unemployment rate came as the household survey found employment soared by more than 4.9 million persons compared to the 1.7 million person increase in the size of the labor force.

Although the unemployment rate fell in May and June, the Labor Department noted the jobless rate is up by 7.6 percentage points since February.

Meanwhile, the report said average hourly employee earnings fell by $0.35 or 1.2 percent to $29.37 in June.

Average hourly earnings also fell in May, with Pearce attributing the drop to composition effects, as low wage workers were disproportionately fired then rehired.

Compared to the same month a year ago, average hourly earnings were down by 2 percent June following a 6.6 percent spike in May.

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