Daily Commentary BY THE CURVE TEAM –

Mixed Signals from Employment Data

17th July, 2020

Updated employment data for June both over and under delivered.

Starting with the positives, over 200 000 jobs were gained in June, easily beating the expected 100 000. This meant nearly one quarter of the 800 000 jobs lost in April and May had been regained.

Despite this, the unemployment rate rose to 7.4% from 7.1%. This was off the back of a surge in the participation rate of 1.3 percentage points to 64%. To recover to pre-Covid levels a 1.8 percentage point rise is still needed, suggesting there is still a large part of the labour force still on the sidelines.

The underwhelming component of the data was the full-time employment numbers. Full time employment went down over June, with 38 100 full time jobs being lost over the month. It means all the net gains from employment were part time jobs.

Relative to pre-Covid levels there are still around 600 000 jobs to be regained, slack remains in the participation rate and full-time employment is tracking down. This is testament to the colossal impact the coronavirus has had on employment and shows the challenge in returning employment back to pre-crisis levels.

Overseas, the US is similarly having ongoing challenges in its labour market. Initial jobless gains was 1.3 million for the week, which showed signs of a plateau. Ongoing claims were 17.3 million.

Josh Stewart

Client Relationship Manager