U.S. adds 4.8 million jobs as unemployment falls to 11.1%, but new shutdowns are underway

WASHINGTON — U.S. unemployment fell to 11.1% in June as the economy added a solid 4.8 million jobs, the government reported Thursday. But the job-market recovery may already be faltering because of a new round of closings and layoffs triggered by a resurgence of the coronavirus.

While the jobless rate was down from 13.3% in May, it is still at a Depression-era level. And the data was gathered during the second week of June, before a number of states began to reverse or suspend the reopenings of their economies to try to beat back the virus.

“This is a bit of a dated snapshot at this point,” said Jesse Edgerton, an economist at J.P. Morgan Chase.

The news came as the number of confirmed infections per day in the U.S. soared to an all-time high of 50,700, more than doubling over the past month, according to the count kept by Johns Hopkins University.

The spike, centered primarily in the South and West, has led states such as California, Texas, Arizona and Florida to re-close or otherwise clamp down again on bars, restaurants, movie theaters, beaches and swimming pools, throwing some workers out of a job for a second time.

President Donald Trump said the jobs report shows the economy is “roaring back,” though he acknowledged there are still areas where “we’re putting out the flames” of the virus.

The job losses over the past two weeks will be reflected in the July unemployment report, to be released in early August.

While the job market improved for a second straight month, the Labor Department report showed that the U.S. remains far short of regaining the colossal losses it suffered this spring. It has recouped roughly one-third of the 22 million jobs lost.

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The re-closings are keeping layoffs elevated: The number of Americans who sought unemployment benefits fell only slightly last week to 1.47 million, according to a separate report. Though the weekly figure has declined steadily since peaking in March, it is still extraordinarily high by historic standards.

And the total number of people who are drawing jobless benefits remains at a sizable 19 million.

The number of laid-off workers seeking jobless benefits rose last week in Texas, Arizona and Tennessee. Though the figure fell in California, it remained near 280,000. That's more people than were seeking unemployment benefits in the entire country before the outbreak took hold in March.

The U.S. job growth in June was driven mainly by companies recalling workers who had been laid off as part of the widespread business shutdowns across the country in the spring.

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In an ominous trend contained in the Labor Department report, more Americans said they had lost jobs permanently. The figure rose 600,000 last month to nearly 2.9 million.

Workers who are permanently laid off typically face a much harder time finding new jobs, and most go to a new company or switch occupations.

“Even as we move into the second half of the year, a large number of people will still be looking for work,” said Eric Winograd, senior U.S. economist at asset manager AllianceBernstein.

Credit and debit card data tracked by JPMorgan Chase show that consumers reduced their spending last week after having increased it steadily in late April and May. The reversal has occurred both in states that have reported surges in COVID-19 and in less affected states, Edgerton said.

And Kronos, which produces time management software, has found that in the past two weeks, growth in the number of shifts worked has slowed in the Southeast.

“The pace of recovery is starting to slow,” said Dave Gilbertson, an executive at Kronos. “We are expecting to see more of a plateauing over the next couple of months.”

McDonald’s has paused its reopening efforts nationwide, and Apple is re-closing scores of its stores in the U.S.

Economists have long warned that the economic benefits of allowing businesses to reopen would prove short-lived if the virus wasn’t brought under control.

Until most Americans feel confident enough to dine out, travel, shop or congregate in groups without fear of infection, restaurants, hotels and stores will lack enough customer demand to justify rehiring all their workers.