According to the latest jobs report, the economy added 850K jobs in June, 2021, soundly beating economists’ consensus predictions of around 650K. After readings of 269K job gains in April and 583K in May, June’s figure marks a significant acceleration in the jobs recovery.
The job gains were broadly spread across the economy, but particularly large in leisure and hospitality (343K), public and private education (268K), and professional and business services (72K). The diffusion index, a measure of the breadth of job gains, rose from 60.9 in April to 63.0 in May to 66.1 in June—a positive sign that ever more of the industries disrupted by the pandemic are now reopening.
With labor force participation likely to rise over the summer and fall as the pandemic abates, schools reopen fully, and expanded unemployment insurance payments come to an end, some of the remaining constraints on job growth could ease. That could lead to even faster job growth down the road.
Key takeaways
- The bottom line is that the economy added a large number of jobs across the economy in June. The recovery is both accelerating and broadening across industries. As labor force participation grows over the late summer and into the fall, hiring troubles should become less of a brake on job growth and the economy should really hit the gas pedal.
- The number of people working part-time for economic reasons fell substantially, by 644K. More and more people who want full-time work are finding it and securing the hours they want, as consumer demand for services rises.
- Wage pressures remain high. The average wage of leisure and hospitality workers has risen more than 10% in the past 6 months and wages overall are above their pre-pandemic trajectory. Higher wages should increasingly draw workers off the sidelines and back into the labor force.
Data inconsistencies
The two components of the jobs report—the payroll survey and the household survey—were starkly at odds with each other, with the household survey showing no employment gain, an increase in the number of unemployed people, and a flat labor force participation rate. But the household survey is generally more volatile and less reliable, so the weak figures are likely an anomaly which will be reversed next month. The payroll survey is generally the one to look at in such cases, and it showed large job gains across most of the economy. This month, in particular, the payroll survey is far more consistent with high-frequency private-sector data from companies like ADP and Homebase, which showed large increases in the number of people working, the number of businesses open, and the number of hours worked. It is also more consistent with ZipRecruiter data, which showed growth in job postings in every major industry in June.
