Home >News >World >U.S. jobs rebound comes with a cost

Jobs kept coming back last month, but with new Covid-19 cases on the upswing as well, the danger is that recovery is about to get cut short.

Worse, recent job gains and the epidemic’s resurgence may not be unrelated.

The U.S. added 4.8 million jobs in June, the Labor Department reported Thursday, following a gain of 2.7 million jobs the previous month, and the unemployment rate fell to 11.1% from 13.3% in May and 14.7% in April. That still left the job market in a deep hole—there were 14.7 million fewer jobs than in February. Still, the report was much better than economists expected.

But it is important to note that when the Labor Department tallies up its employment figures, it refers to pay periods in the week including the 12th of the month. Since that midmonth period the jobs picture has gotten murkier. Separately on Thursday, the Labor Department reported that the number of people filing new unemployment-insurance claims in the week ended this past Saturday came to a seasonally adjusted 1.43 million, a drop of just 55,00 from a week earlier, which was significantly higher than economists had forecast. Moreover, data from scheduling-software company Homebase show that the average number of hourly employees working at local restaurants, retailers and other small businesses in the week ending Wednesday slipped from the previous week.

Now states where coronavirus cases are surging, such as Texas, are imposing new restrictions, while other places, such as New Jersey, are postponing plans to allow indoor dining. As a result, jobs in industries that got hit hardest by the Covid-19 crisis—such as those in restaurants and retailing—and which in some places have experienced big rebounds, could get hit anew.

Robert Barbera, director for the Center for Financial Economics at Johns Hopkins University, worries that job creation in industries with high degrees of customer contact may actually be predictive of new Covid-19 cases. His gauge of high-contact employment, which includes restaurant, hotel and retailing jobs, registered a loss of 10.8 million jobs from February to April, and has regained 4.5 million jobs since then.

“The idea is employment in sectors that inhibit social distancing are a crude proxy for social distancing," he says. So after those sectors lost jobs, new Covid-19 cases, with a lag, also fell. And the rebound in those jobs is, also with a lag, associated with a pickup in cases. Similarly, an analysis of credit-card data conducted by JPMorgan Chase economist Jesse Edgerton found that local spending at restaurants is predictive of new virus cases over the subsequent three weeks.

The danger is the U.S. has entered an unfortunate cycle, where employment gains lead to more Covid-19 cases, and more cases lead to those employment gains getting lost. The challenge for the U.S. is to break that cycle so that more people can get back to work without public health becoming even more imperiled. Better adherence to mask guidelines and other measures that are already in place could be a start.

Write to Justin Lahart at justin.lahart@wsj.com

This story has been published from a wire agency feed without modifications to the text.

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