WASHINGTON (Reuters) - The U.S. economy created a record 4.8 million jobs in June as more restaurants and bars resumed operations, but layoffs remained elevated and raging COVID-19 cases across the country threaten the fledgling recovery.
The flare-up in coronavirus infections, which started in late June, was not captured in the Labor Department’s closely watched monthly employment report published on Thursday as the government surveyed businesses in the middle of the month.
The reopening of businesses after being shuttered in mid-March has unleashed a wave of coronavirus infections in large parts of the country, including the populous California, Florida and Texas. Several states are scaling back or pausing reopenings, and sending some workers back home.
Still, the rebound in hiring added to a stream of data, including consumer spending, in suggesting that the recession which started in February was likely over.
Federal Reserve Chair Jerome Powell this week acknowledged the rebound in activity, saying the economy had “entered an important new phase and (had) done so sooner than expected.” But Powell cautioned the outlook “is extraordinarily uncertain” and would depend on “our success in containing the virus.”
The jump in nonfarm payrolls in June was the largest since the government started keeping records in 1939. Payrolls rebounded 2.699 million in May after a historic 20.787 million plunge in April. Economists polled by Reuters had forecast payrolls increasing by 3 million jobs in June.
President Donald Trump at a press briefing after the data said the jobs report “proves that our economy is roaring back.”
But despite the better-than-expected increase, employment remains 14.7 million jobs below its pre-pandemic level.
The measurement of the unemployment rate continued to be biased down by people incorrectly misclassifying themselves as being “employed but absent from work” last month.
The jobless rate fell to 11.1% last month from 13.3% in May. The Labor Department’s Bureau of Labor Statistics, which compiles the employment report, said the unemployment rate would have been 12.1% without the misclassification problem.
Hiring last month was boosted by the typically low-paying leisure and hospitality industry, which added 2.1 million jobs, accounting for about two-fifths of the gains in payrolls. The return of these workers pushed down average wages 1.2% in June.Some companies are cutting wages and reducing hours.
Stocks on Wall Street rallied on the employment data. The dollar was steady against a basket of currencies. U.S. Treasury prices fell.