July 2, 2020

Payroll employment rose 4,800 in June after having climbed by 2,699 thousand in May after having plunged by 20,787 jobs in April and 1,352 thousand in March.

Given the sharp drop in employment beginning in March and continuing into April, the National Bureau of Economic Research has concluded that the expansion ended in February 2020 and the recession began in March 2020.    Given that employment rose sharply in both May and June, the NBER will likely mark the end date of the recession in April  If that happens the recession will have lasted just two months, far shorter than the average length of 8 months.

Not surprisingly the June increases were widespread.  Leisure and hospitality industry jobs rose 2,088 thousand.   Retail gained 740 thousand jobs.  In health care jobs climbed by 358 thousand.  Education employment rose 93 thousand.  Social service sector jobs rose 117 thousand.   Admin and support services rose 243 thousand.  Construction increased 158 thousand.  Factory employment rose by 356 thousand.  Government jobs rose 33 thousand.  Employment in transportation and warehousing climbed by 99 thousand.

In addition to laying off people, businesses can also shorten the hours of existing employees.  The nonfarm workweeks declined 0.2 hour to 34.5 hours after having  jumped by 0.5 hour in May to 34.7 hours.  The May level of 34.7 was the longest workweek on record.  It is not surprising that it dropped back somewhat in June.

The changes in  employment and hours worked are reflected in the aggregate hours index which rose 3.6% in May to 100.9 after having risen 2.1% in April after having fallen 13.8% in April and 0.9% in March.  The quarterly average for the second quarter is 50.3% below its quarterly average for the first quarter.  As a result, it appears that Q2 GDP is on track to decline by 50.0%.  That figure will be released at the end of July.

However, the government’s $2.5 billion in fiscal stimulus is quickly spreading into the economy.  As a result we , anticipate an increase in GDP of 50% or so in Q3 and 7.0% growth in the fourth quarter.

Stephen Slifer


Charleston, S.C.