Nonfarm Payroll Jobs Increased 19,000, Unemployment Rate Decreased to 6.6 Percent in June

July 17, 2020

FOR IMMEDIATE RELEASE: July 17, 2020

Nonfarm Payroll Jobs Increased 19,000, Unemployment Rate Decreased to 6.6 Percent in June

AUGUSTA - Workforce conditions continued to recover in June from the effects of the COVID-19 pandemic. The monthly payroll and household surveys indicate:

• Nonfarm payroll jobs increased 19,000 in June and 33,200 in the last two months, mostly in sectors that had the sharpest job losses since February
• The number of nonfarm jobs remained 71,300 lower than in February
• The unemployment rate decreased to 6.6 percent
• The labor force participation rate increased to 59.9 percent, but remained low
• Unemployment estimates continued to understate the extent of workforce displacement

Seasonally Adjusted Estimates

Payroll Survey Estimates The number of nonfarm payroll jobs in Maine increased by 19,000 in June, the largest monthly gain on record, following a revised increase of 14,200 in May. The private sector added 19,300 jobs, primarily in the healthcare and social assistance, leisure and hospitality, and retail trade sectors, each of which had sharp job losses in March and April and began to recover in May. Private sector gains were partially offset by a decrease of 300 jobs in the public sector, mostly in local government education.

The 566,000 nonfarm jobs in June remained 11 percent lower than in February, before the pandemic began to appreciably impact the labor market. Net job losses occurred in nearly every industry sector in the last four months. The highest rates of job loss in that period were in the leisure and hospitality, information, private education, state and local government, and manufacturing sectors. The largest net job losses were in the leisure and hospitality, healthcare and social assistance, and local government sectors, where nearly two-thirds of the decrease occurred.

The Portland-South Portland metro area has had the strongest recovery in the last two months, up 4.5 percent, after the steepest decrease through April. The number of nonfarm jobs remains 13 percent lower than in February compared to 10 percent in the other two metros and non-metro areas.

Household Survey Estimates The official unemployment rate decreased to 6.6 percent from a revised rate of 9.4 percent for May and a series high of 10.4 percent for April. The number of unemployed people decreased to 44,100 for June from a revised 62,700 for May and 68,800 for April. The U.S. unemployment rate estimate for June of 11.1 percent was down from 13.3 percent for May and 14.7 percent for April.

Official unemployment estimates for the period that the pandemic has been impacting the labor market have not fully reflected the magnitude of job loss that has occurred for two reasons. The first is related to work search and availability to work. To be counted as unemployed, a person must have engaged in work search activities in the previous four weeks, and they must have been available for work. The pandemic prevented thousands of people who lost a job and wanted a new job from engaging in normal work search activities because of the stay at home order and because of personal safety concerns. If not for the fact that they could not engage in work search, nearly 29,000 more people would have been in Maine's labor force and counted as unemployed. As the table above indicates, there has been a sharp rise in the number of people not in the labor force since February.

The second issue causing estimates to understate unemployment is misclassification of people who were temporarily laid off and who expect to return to their job. Those people should have been classified as "temporarily unemployed" by survey interviewers. The U.S. Bureau of Labor Statistics, which establishes the parameters of the survey, has indicated that about 14,100 more people in Maine were classified as employed, not at work than usually is the case in June. BLS has indicated that those people should have been classified as temporarily unemployed.

The combined effect of these two issues is that the official estimate of the number of unemployed (44,100) is about half of the actual number of people who would be counted as unemployed if they could have engaged in work search or were not misclassified. The Maine Department of Labors Center for Workforce Research and Information has developed alternative estimates including those two additional groups in the count of unemployed for May. Adding these groups, the unofficial unemployment rate in Maine would be 12.4 percent, down from 18.0 percent in May. The comparable national rate would be 15.0 percent, down from 19.7 percent.

Data from these surveys raises certain questions about how it is collected and produced, its accuracy, and how to reconcile seemingly different indications of workforce conditions. We have provided some context to this information in a blog post - https://www.maine.gov/labor/cwri/employmentsituationFAQ.pdf . Please contact us if you have questions or need clarification.

Regional Household Survey Estimates The June unemployment rate estimate for New England was 13.4 percent, down from an upwardly revised 14 percent for May. Rates for other states in the region were 11.8 percent in New Hampshire, 9.4 percent in Vermont, 17.4 percent in Massachusetts, 12.4 percent in Rhode Island, and 9.8 percent in Connecticut.

Not Seasonally Adjusted Substate Estimates

Unemployment rates increased from a year ago throughout the state. Increases generally were the largest in the most densely populated counties and smallest in the least densely populated counties, with some exceptions. The regional differential in unemployment rates in June is lower than usual.

The not seasonally adjusted statewide unemployment rate estimate of 6.4 percent for June was up from 2.8 percent one year ago. Unemployment rates were lowest for Sagadahoc (5.4 percent) and highest for Oxford (8.0 percent) counties. Rates were up in all 16 counties. The largest over the year increase was in Oxford and the smallest was in Aroostook.

Among Metro Areas, the June unemployment rate was below the statewide average in Bangor (6.0 percent) and above the statewide average in Portland-South Portland (6.7 percent) and Lewiston-Auburn (6.7 percent).

July workforce estimates will be published Friday, August 21 at 10 a.m. (Data Release Schedule- https://www.maine.gov/labor/cwri/releaseDates.html).

This release is available here: https://www.maine.gov/labor/cwri/news/release.html

Labor force and unemployment data is available here: https://www.maine.gov/labor/cwri/laus1.html

Nonfarm payroll jobs data is available here: https://www.maine.gov/labor/cwri/ces1.html

Monthly workforce estimates are cooperatively produced and released by the Maine Department of Labor, Center for Workforce Research and Information and the U.S. Department of Labor, Bureau of Labor Statistics.

NOTES

1. Preliminary seasonally-adjusted labor force estimates, including rates (labor force participation, employment, and unemployment rates), and levels (labor force, employed, and unemployed) tend to move in a direction for several months and then reverse course. Those directional trends are largely driven by a smoothing procedure and may not indicate a change in underlying workforce conditions. Annual revisions (published in March each year) tend to moderate or eliminate those directional patterns. A comparison of 2019 preliminary and revised estimates of labor force and unemployment rates, as well as nonfarm payroll jobs, is available at https://www.maine.gov/labor/cwri/blogs/2019workforcedata_revisions.pdf .

2. The 90 percent confidence interval for statewide unemployment rates has been 0.5 to 0.7 percentage points above or below the published estimate for most months over the last four years. For June 2020 it is one percentage point.

3. To assess job growth, we recommend looking at nonfarm jobs from the payroll survey rather than resident employment from the household survey. The payroll survey is larger, has smaller margins of error, and is subject to smaller revisions. A 2016 blog on the differences in accuracy of the two measures provides more context at www.maine.gov/labor/cwri/blogs/imprecise_data.pdf .

4. Nonfarm payroll jobs estimates tend to be volatile from month to month because there is variability in the sample of reporting employers and their representativeness for the universe of all employers. Additionally, seasonal adjustment is imperfect because weather, the beginning and ending of school semesters, holidays, and other events do not always occur with the same timing relative to the pay period that includes the 12th day of the month, which is the reference period. This sometimes exacerbates monthly volatility. Users should look to the trend over multiple months rather than the change from one specific month to another. Estimates for the period from October 2019 to September 2020 will be replaced with actual payroll data in March 2021. Those benchmark revisions are likely to show less volatility than preliminary estimates do.