June Jobs Report: 4.8M Jobs Added, Unemployment Rate Drops To 11.1%

This morning's employment report for June showed a 4.8M increase in total nonfarm payrolls, which was above the Investing.com forecast of 3M.

Here is an excerpt from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:

Total nonfarm payroll employment rose by 4.8 million in June, and the unemployment rate declined to 11.1 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. In June, employment in leisure and hospitality rose sharply. Notable job gains also occurred in retail trade, education and health services, other services, manufacturing, and professional and business services.

This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry. For more information about the concepts and statistical methodology used in these two surveys, see the Technical Note.

Coronavirus (COVID-19) Impact on April 2020 Establishment and Household Survey Data

Data collection for both surveys was affected by the coronavirus (COVID-19) pandemic. In the establishment survey, approximately one-fifth of the data is assigned to four regional data collection centers. Although these centers were closed, interviewers at these centers worked remotely to collect data by telephone. Additionally, BLS encouraged businesses to report electronically. The collection rate for the establishment survey in June was 63 percent, lower than collection rates prior to the pandemic. The household survey is generally collected through in-person and telephone interviews, but personal interviews were not conducted for the safety of interviewers and respondents. The household survey response rate, at 65 percent, was about 18 percentage points lower than in months prior to the pandemic.

In the establishment survey, workers who are paid by their employer for all or any part of the pay period including the 12th of the month are counted as employed, even if they were not actually at their jobs. Workers who are temporarily or permanently absent from their jobs and are not being paid are not counted as employed, even if they are continuing to receive benefits. In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (June 7th through June 13th). Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff. In June, a large number of persons were classified as unemployed on temporary layoff.

As was the case in March, April, and May, household survey interviewers were instructed to classify employed persons absent from work due to temporary, coronavirus-related business closures as unemployed on temporary layoff. BLS and Census Bureau analyses of the underlying data suggest that this group still included some workers affected by the pandemic who should have been classified as unemployed on temporary layoff.

The degree of misclassification declined considerably in June. BLS and Census Bureau staff have been reviewing survey responses that might have been misclassified. The misclassification hinges on a question about the main reason people were absent from their jobs. If people who were absent due to temporary, pandemic-related closures were recorded as absent due to “other reasons,” they could have been misclassified. When interviewers record a response of “other reason,” they also add a few words describing that other reason. The review of these brief descriptions found that the share of responses that may have been misclassified was much smaller in June than in prior months. BLS and the Census Bureau are continuing to investigate the misclassification and are taking additional steps to address the issue.

If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical June) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 1 percentage point higher than reported (on a not seasonally adjusted basis). However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.

According to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.

More information is available at www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf.

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