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US economy adds 850,000 jobs while unemployment rate rises to 5.9%

In June, the U.S. economy gained employment for the sixth consecutive month, with job creation gaining up momentum amid the economy's recovery.

The U.S. Labor Department issued its June jobs report at 8:30 a.m. ET on Friday. The following are the key metrics from the study, as compared to Bloomberg consensus estimates:

  • Change in non-farm payrolls: 850,000 vs. 720,000 expected and an upwardly revised 583,000 in May

  • Unemployment rate: 5.9% vs. 5.6% expected and 5.8% in May

  • Average hourly earnings, month-over-month: 0.3% vs. 0.3% expected and a downwardly revised 0.4% in May

  • Average hourly earnings, year-over-year: 3.6% vs. 3.6% expected and a downwardly revised 1.9% in May

The jobs report on Friday also included changes to the previous two months' payroll statistics. Nonfarm payroll increases in April were revised down by 9,000 to 269,000, while those in May were increased up by 24,000 to 583,000.

The leisure and hospitality businesses, which were most impacted in the early phases of the epidemic, saw the highest payroll growth in June. These created 343,000 positions in June, following a 306,000 increase in May. However, the labor gap across these businesses — with leisure and hospitality still down by 2.4 million jobs from February 2020 levels — accounts for the majority of the approximately 6.8 million total jobs the economy still has to recoup from before the epidemic.

Other industries witnessed significant employment growth in June as well. In the services sector, retail trade gained 67,100 jobs, more than double the May increase, while professional and business services added 72,000 positions. Manufacturing employment growth slowed more than predicted in June, with payrolls growing by 15,000 after surging by 39,000 in May. Government payrolls increased by 188,000 in June, resulting in a surge in public-sector employment.

Some economists and public officials have pointed to the federally increased unemployment compensation as one factor influencing the rate of labor force return. While only one of a number of variables, some are anticipating an increase in filled positions once these benefits expire in about half of the United States throughout the summer, and in the remaining states by early September.

Given that the survey week for the monthly jobs reports occurs from the 12th to the 14th, Friday's print did not contain any significant impact from states withdrawing federal extended unemployment benefits early. For four states, the phase-out period began on June 12. However, by the July jobs report, more than two dozen states will have partially or completely eliminated these benefits, potentially affecting future job numbers.

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