The U.S. has finally beaten jobs expectations, adding 850,000 new jobs. However, unemployment and labor force participation did not budge and are still far below pre-pandemic levels.
After a series of disappointing job reports, June non-farm payroll data finally beat expectations. The economy added 850,000 new jobs in June, a jump of almost 50% from 583,000 in May. June payrolls beat the consensus expectations of 720,000.
Jobs growth was strongest in the service sector. Leisure and hospitality, public and private education, professional and business services, retail trade were among the best performing sectors in terms of jobs growth.
However, despite the encouraging payroll data, June unemployment and the labor participation rate were almost unchanged.
The unemployment rate was at 5.9%, vs 5.8% in May. Economists expected an unemployment rate of 5.6%.
The labor force participation rate was unchanged at 61.6% in June. The
employment-population ratio was also unchanged, at 58.0%.
Both unemployment and labor force participation remain below pre-pandemic levels.
How is that possible? Both unemployment and labor force participation rates are measures that include those that are actively looking for work with those that are employed.
The disappointing job data means that, while 850,000 people were hired, others just stopped looking for work. All while unfilled positions are at record levels.
This is bad news for employers, for whom the labor shortage is reaching crisis proportions.