U.S. employers added a much-larger-than-expected 4.8 million workers to payrolls last month, data from the Bureau of Labor Statistics estimated Thursday, slashing the headline unemployment rate to 11.1%.
The surge in job creation for the month followed data showing both an upward revision for May additions, to 2.7 million from 2.5 million, and a stronger-than-expected reading of jobless claims for the week of June 27, which fell for the 13th week in a row to 1.427 million.
The weekly reading could, in fact, go some way in confirming the strength of the June reading, which topped analysts' forecasts of a 3 million tally but was derived from data collected during the second week of the month - which preceded a series of 'second wave' coronavirus headlines that triggered a pause in re-opening plans for businesses and factories around the country.
"Another surprisingly strong jobs report released today showed Americans were hired back by the millions last month, but as with last month’s report, it came with major caveats,” said Navy Federal Credit Union chief economist Robert Frick. “The biggest is the surge in COVID-19 cases in many states across the country that may slow hiring significantly this summer. Also a possible drag: the number of weekly unemployment claims remains alarmingly high, having barely dropped from the previous week.”
“This means that while hiring is occurring in areas such as leisure and hospitality, many are being laid off in support industries and in state and local governments, for example, and the number of “permanently” unemployed inched up,” he added. ”The jobs recovery continues, and continues to be shambolic, but overall, the country just booked a second month of multi-million job gains."
The gains still leave more than 16 million Americans out of work, a number that could rise in the coming weeks as bars, restaurants and cafes in various parts of the country delay or reverse plans to re-open in the face of a spike in new coronavirus infections, which hit a record 50,000 yesterday, according to data from Johns Hopkins University.
"Today’s jobs report is a look in the rear-view mirror,' cautioned Glassdoor's chief economist Andrew Chamberlain. "With surging COVID-19 cases hitting new highs in the past week, rough waters are surely ahead for the economy in the coming months as a second wave could again shutter millions of American small businesses and put a freeze on hiring."
However, with broad sections of the economy -- from manufacturing activity, which hit a 14-month high last week, to house prices and consumer spending -- showing definitive signs of improvement, and drugmakers such as Pfizer (PFE) - Get Report and Gilead Sciences (GILD) - Get Report advancing on studies to produce both a vaccine and a treatment for the deadly disease, investors appear ready to extend risk heading into the start of trading.
U.S. equity stocks surged higher on the news, with the Dow Jones Industrial Average rising 400 points at opening bell gain while the S&P 500 added 41 points at the start of trading.
The Nasdaq Composite index, meanwhile, printed a fresh all-time high of 10,294.1 points, extending its year-to-date-gain to nearly 20%.