Unemployment Rate Falls to 11.1 Percent; Another 1.4 Million Jobless Claims Filed
Employment surprisingly rose by 4.8 million in June as the U.S. unemployment rate fell to 11.1 percent, according to the most recent U.S. Bureau of Labor Statistics report released this morning. These improvements in the labor market reflect a limited resumption of economic activity that had been curtailed in March, April and May due to the coronavirus (COVID-19) pandemic and efforts to contain it.
The Labor Department also reported this morning that 1.4 million Americans filed new claims for state unemployment benefits last week. More than 43 million people have now filed for unemployment benefits over the past 12 weeks, representing the biggest jobs loss in U.S. history.
During the week, 47 states reported 12,853,163 individuals claiming Pandemic Unemployment Assistance benefits and 39 states reported 749,703 individuals claiming Pandemic Emergency Unemployment Compensation benefits.
The highest insured unemployment rates in the week were in Puerto Rico (23.0), Nevada (21.4), Hawaii (21.3), the Virgin Islands (17.8), New York (17.5), California (16.0), Louisiana (15.9), Massachusetts (15.9), Georgia (15.3), and Connecticut (15.2). The largest increases in initial claims for the week ending June 20 were in California (+43,070), Maryland (+9,099), Florida (+7,535), New Jersey (+6,589), and Indiana (+5,314), while the largest decreases were in Oklahoma (-26,166), Kentucky (-12,804), Oregon (-8,371), Georgia (-6,272), and New York (-6,119).
“Data on jobless claims remains noisy at this point due to processing lags, but the fact that cumulative jobless claims over recent weeks are implying a considerably higher level of continuing claims, compared with reported continuing claims data that has been broadly flat over the past four weeks, suggests a high level of churn in the labor market continued through June,” Morgan Stanley wrote in a note.
Where Job Growth Occurred
- Employment in leisure and hospitality rose sharply in June. Notable job gains also occurred in retail trade, education and health services, other services, manufacturing, and professional and business services.
- In June, employment in leisure and hospitality increased by 2.1 million, accounting for about two-fifths of the gain in total nonfarm employment. Over the month, employment in food services and drinking places rose by 1.5 million, following a gain of the same magnitude in May. Despite these gains, employment in food services and drinking places is down by 3.1 million since February. Employment also rose in June in amusements, gambling, and recreation (+353,000) and in the accommodation industry (+239,000).
- In June, employment in retail trade rose by 740,000, after a gain of 372,000 in May and losses totaling 2.4 million in March and April combined. On net, employment in the industry is 1.3 million lower than in February. In June, notable job gains occurred in clothing and clothing accessories stores (+202,000), general merchandise stores (+108,000), furniture and home furnishings stores (+84,000), and motor vehicle and parts dealers (+84,000).
- Employment increased by 568,000 in education and health services in June but is 1.8 million below February’s level. Healthcare employment increased by 358,000 over the month, with gains in offices of dentists (+190,000), offices of physicians (+80,000), and offices of other health practitioners (+48,000). Elsewhere in healthcare, job losses continued in nursing care facilities (-18,000). Employment increased in the social assistance industry (+117,000), reflecting gains in child day care services (+80,000) and in individual and family services (+28,000). Employment in private education rose by 93,000 over the month.
- Employment increased in the other services industry in June (+357,000), with about three-fourths of the increase occurring in personal and laundry services (+264,000). Since February, employment in the other services industry is down by 752,000.
- In June, manufacturing employment rose by 356,000 but is down by 757,000 since February. June employment increases were concentrated in the durable goods component, with motor vehicles and parts (+196,000) accounting for over half of the job gain in manufacturing. Employment also increased over the month in miscellaneous durable goods manufacturing (+26,000) and machinery (+18,000). Within the nondurable goods component, the largest job gain occurred in plastics and rubber products (+22,000).
- Professional and business services added 306,000 jobs in June, but employment is 1.8 million below its February level. In June, employment rose in temporary help services (+149,000), services to buildings and dwellings (+53,000), and accounting and bookkeeping services (+18,000). By contrast, employment declined in computer systems design and related services (-20,000).
- Construction employment increased by 158,000 in June, following a gain of 453,000 in May. These gains accounted for more than half of the decline in March and April (-1.1 million combined). Over-the-month gains occurred in specialty trade contractors (+135,000), with growth about equally split between the residential and nonresidential components. Job gains also occurred in construction of buildings (+32,000).
- Transportation and warehousing added 99,000 jobs in June, following declines in the prior two months (-588,000 in April and May combined). In June, employment rose in warehousing and storage (+61,000), couriers and messengers (+21,000), truck transportation (+8,000), and support activities for transportation (+7,000).
- Wholesale trade employment rose by 68,000 in June but is down by 317,000 since February. In June, job gains occurred in the durable goods (+39,000) and nondurable goods (+27,000) components.
- Financial activities added 32,000 jobs in June, with over half of the gain in real estate (+18,000). Since February, employment in financial activities is down by 237,000.
- Government employment changed little in June (+33,000), as job gains in local government education (+70,000) were partially offset by job losses in state government (-25,000). Government employment is 1.5 million below its February level.
- Mining continued to lose jobs in June (-10,000), with most of the decline occurring in support activities for mining (-7,000). Mining employment is down by 123,000 since a recent peak in January 2019, although nearly three-fourths of the decline has occurred since February 2020.
Top Search Consultants Weigh In
“With U.S. unemployment rates at 20 million plus the U.S. federal government has a major decision to make,” said Dan Jermy, principal at Wilton & Bain. “Namely, does the government continue to provide unemployment benefits or do they focus on attempting to create jobs and get people back to work? Until last week market confidence had been growing off the back of dropping cases and states reopening.”
“Given the climbing COVID-19 case levels across the U.S. this confidence is being eroded,” Mr. Jermy said. “Statistics show that many Americans are paid more in unemployment benefits than they earned when at work. Therefore, the major test of economic recovery (which is intertwined to this government’s re-election bid) will be closely tied to how the U.S. job market can switch back on and create job opportunities vs indefinitely fund unemployment stimulus packages until we find a vaccine.”
“As a leading boutique search firm in the luxury and specialty brand space, we have seen sudden and precipitous effects on this sector from furloughs and subsequent layoffs following store closures, both temporary and permanent,” said Rob Bowerman, president of The Bowerman Group. “That has created a surge of applicants for rank-and-file and management positions that arise as retail channels have opened over the past several weeks. Unemployment filings from this sector may continue to be robust as smaller companies have burned through their PPP funding but still cannot fully re-open retail stores and/or are seeing continued reduction in comp retail sales due to lower traffic.”
“That said, we are now seeing a subsequent uptick in needs for strategic leadership in all channels of distribution for our clients across retail, wholesale and e-commerce,” Mr. Bowerman said. “Many organizations have used this shutdown period as a time for re-aligning their Direct-to-Consumer (DTC) channels and the need for stronger leadership to drive revenue in the back half of 2020 and beyond is rising. From conversations I am having with our C-level hiring partners, as their corporate offices are reopening and teams are re-gathering, the stage is set for a busy late summer and fall.”
As recruiting partners, he added, “we need to be keenly focused on our clients’ needs and strategies for survival and growth going forward.” In addition to meaningful leadership searches, he said, “we also see an increase in need for executive level contract talent to help companies continue weathering the storm and developing strategies. We have expanded our suite of service offerings so that we can be nimble and meet clients where they are to ensure the right leadership is in place for their business.”
“At Succession, we have seen an aggressive move into companies assessing who is essential at the board level,” said Ahmad Popalyar, president and CEO of Succession Executive Search. “Clients are gravitating to battle-tested board members to help them through restructurings or loan workouts. This also has been the case among CEO and CFO searches when it comes to middle market portfolio companies.”
This, he said, “is going to become a staple on boards in private equity and public companies for years to come.” It is also crucial for companies to have a strong and defined diversity and inclusion strategy, he added. “This has become an aggressive theme as a growing number of institutional investors won’t invest with your fund unless you have a diverse board.”
Succession Executive Search has worked on multiple board and C-level assignments while weaving in a strong diversity and inclusion strategy. “This isn’t a short-term band aid fix; you’ll have to plan for the long term to be successful in hiring the right executive,” he noted.
“The majority of our clients are venture and PE-backed firms,” said Joshua R. Hollander, president and CEO of Horton International. “For those with strong balance sheets or even managed to close new rounds of capital during COVID, there is an excellent opportunity to top-grade talent in critical areas due to the uncertainty faced by their competitors in less favorable financial positions. For our more traditional clients, we see an intense focus on adding talent with digital transformation skills, as many corporations are rapidly accelerating digitization strategies due to today’s new requirements for engaging with internal and external stakeholders.”
He said his firm has been having “interesting conversations” with CEOs regarding corporate resiliency now that organizations have settled into new remote work models. “While many companies have seen productivity gains, it is unclear whether the new work-life balance is sustainable and steps are needed to ensure employee and overall corporate wellbeing. There are implications for succession planning, organizational design, and even diversity and inclusion programs.”
One of the assessment tools Horton has added to its suite of services is a remote work scorecard that benchmarks individuals and teams against the psychometrics that define high performing remote workers. “It is a valuable tool for helping leaders, managers, and employees better understand the new opportunities and challenges they face and better set themselves and their teams up for success,” said Mr. Hollander.
[Content sourced from the original article, viewable here]
