skip navigation


Stay up to date on timely topics and market events. Subscribe to our Blog now.

July 02, 2020

Payroll Jobs Rise Another 4.8 Million in June…Pauline’s Economy

By Michael J. Bazdarich, PhD

Stay up to date on timely topics and market events. Subscribe to our Blog now.

Total payrolls rose by 4.800 million in June, with the May estimate revised upward by 90,000. Private-sector payrolls rose by 4.767 million jobs in June, with May revised upward by 27,000. Finally, the “core” jobs measure we focus on, private-sector jobs excluding construction and retailing, rose by 3.869 million in June, with May revised upward by 71,000.

Those May job gains a month ago were startlingly better than consensus estimates, showing gains of around 3 million when the consensus was looking for declines of 8 million. Today’s announced gains for June are almost twice as large as what the consensus was looking for. The “extra” 2.3 million jobs announced today would have been startling just a year ago. That they pale in comparison to last month’s surprise is merely a sign of the times…more on that in a moment.

As strong as today’s gains were, they leave job totals far below what we were seeing pre-COVID. Thus, total payrolls declined by 22.1 million in March and April, recouping 7.4 million of those declines in May and June. Private-sector payrolls declined by 21.1 million during the COVID shutdown and have recouped 8.0 million of those losses under the reopening so far.

As expected, gains have been relatively the strongest in goods-producing and construction sectors, while some hard-hit service sectors are only beginning to see a bounce, if that. Thus, for manufacturing, after losses of 1.363 million jobs in March and April, the rebound in May and June amounts to 0.606 million, nearly a halfway retracement. Construction lost 1.083 million jobs in March and April and has recouped 0.612 million jobs in the last two months, for a retracement of more than halfway.

Exhibit 1: Jobs in Goods-Producing and Hard-Hit Services
Explore Jobs in Goods-Producing and Hard-Hit Services
Bureau of Labor Statistics. As of 30 Jun 20. Select the image to expand the view.

Health care services were devastated by the COVID shutdown, losing 1.557 million jobs (about 10% of the February total). The rebound in the last two months has been 0.673 million, for a decent bounce. Similarly, after a loss of 6.076 million jobs in March and April (down nearly 50%), food service (restaurant) employment has rebounded by 2.945 million jobs in May and June.

In other, leisure-oriented services, however, the rebound is only nascent, if that. Thus, passenger travel sectors continued to lose jobs in recent months, down another 50,000 in May and June, following 290,000 of losses in March and April, for a total decline near 35%. Accommodations (hotels) has recouped only 125,000 of the 912,000 jobs lost (about a 45% drop) during the shutdown. Recreation and spectator sports lost 1.329 million jobs (a decline of more than 50%) during the shutdown and has recouped only 0.42 million of those under the reopening to date.

If there is a consolation in the service sectors’ travails, it is that the sectors still hurting the most are relatively small. The biggest players among services are health care and restaurants, and the rebounds there have been more substantial, though still incomplete.

As you will recall, estimates for 2Q GDP had been in the -40% range. With last month’s consumer spending gains and this month’s job gains, we would expect these estimates to move to the -25% to -30% range, and 3Q could show a gain above 20%. However, because of the arithmetic of percent changes, that combination—along with the -5% decline in 1Q—would still leave the economy way below its pre-COVID levels.

Meanwhile, we have risks of renewed shutdowns in some industries. This economy is reminiscent of a silent-movie-era serial called The Perils of Pauline, where at the end of each episode, the eponymous heroine would be faced with a new threat to her life. Stay tuned to see how we weather the risks of July.

© Western Asset Management Company, LLC 2021. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.