US Job Market on the Road to Recovery

Since March, our LinkedIn Hiring Rate data has shown a swift and dramatic weakening in the US job market. Even as hiring began to recover in other countries, the US wasn’t showing much of an improvement. But in June, we finally saw hiring increase - albeit by a meager 0.1% month-over-month, seasonally adjusted. We saw these trends mirrored in all of the BLS data we track, too: net jobs increased 4.8 million between mid-May and mid-June, and unemployment insurance claims continued to fall.

When we zoom in to look at what’s happening across industries and cities, the picture iswas mixed. Hiring increased in 12 of 20 cities we track on a monthly basis, and in 19 of 24 industries. These regional and industry differences are normal for a turning point in the economy.   

We saw the largest seasonality adjusted metro area gains in Detroit (66% month-over-month), St. Louis (58%), and Atlanta (39%). The rebound seem to have two primary factors - the lifting of public health restraints on manufacturing, which were beneficial for manufacturing hubs in the Midwest;, as well as a much broader reopening encompassing retail and recreation, concentrated primarily in the southern United States. Recovery in large coastal metro areas, which have less exposure to manufacturing and have been slower to remove restrictions, have been slower to rebound.  

The largest industry gains were seen in recreation & travel (157%), which includes restaurants. The huge gains in this industry corresponds with reopenings in June, but could be undercut by current spikes in COVID cases. Legal services (99%), construction (77%), and energy & mining (68%) were among other industries climbing up the fastest in June.

It’s important to qualify this promising news with a reminder of just how deep a deficit we are climbing out of. Even after June’s gains, hiring is still down by double digits year-over-year across nearly every metro area and industry and total net job losses reported by BLS since March total 14.7 million.

The US labor market also remains fragile to reversals. Most concerning is the pickup in COVID19 transmission across much of the Southeast and Southwest United States, but COVID is not the only risk.  

Even as hiring has picked up relative to May, businesses continue to lay off a large volume of workers, and the most recent layoffs are more likely to be permanent than those at the beginning of the crisis. Data from BLS’s newest July report also suggests that the scale of permanent job loss is thus far comparable to a more mild, 2001-03 recession, and could keep climbing in the coming months

State & local governments are experiencing an intensifying budget crunch. And the fiscal stimulus that has supported households and businesses thus far could expire this summer and fall.

The takeaway from our data here: things are finally turning around and look promising, but we remain in the early, tentative stages of what is likely to be a long recovery.