The US economy added 850,000 jobs in June

The US economy added 850,000 jobs in June. A bartender pours drinks at a nightclub in Washington, D.C. on Friday, June 11.

(CNN) -- The US economy added 850,000 jobs in June, when adjusted for seasonal changes. It was far more than economists had expected and a signal that American job growth is accelerating.

It was the biggest monthly jobs gain since August 2020, when the economy added 1.6 million jobs.

The hospitality and leisure sector grew the strongest, having the most ground to cover after the pandemic devastated the travel and service industries. That sector added 343,000 jobs. More than half of them were at restaurants and bars.

The number of education jobs also surged in June. Local government hiring jumped by 155,000 jobs, state governments jobs increased by 75,000, and private education positions were up by 39,000. The sector has seen a lot of fluctuation during the pandemic, distorting its seasonal patterns, making it harder to know what's actually going on from month to month.

Nevertheless, June was a "bright" jobs report, even though there is still plenty to worry about, wrote Kate Bahn, interim chief economist at the Washington Center for Equitable Growth, in a tweet. It "just means it's good foundation to grow," she added.

America's once-strong labor market is still far from being back to normal, down 6.8 million jobs compared with February 2020. According to the report, 6.2 million people reported that they didn't work at all or worked less because their employer had been affected by the pandemic.

A tale of two job markets

The unemployment rate stood at 5.9%, up from 5.8% in May, the Bureau of Labor Statistics reported Friday.

While the labor force participation rate was unchanged at 61.6%, the number of people quitting their jobs voluntarily to look for another position jumped by 164,000 to 942,000 in June -- the highest level since November 2016.

It might seem counter-intuitive, but this actually could be a sign of worker empowerment: people who had few alternatives during the height of the pandemic, might be reconsidering their workplace now. And workers might take more time deciding on taking a job right now.

Normally, workers who quit their jobs aren't eligible for benefits. But the pandemic has changed the rules slightly, making certain circumstances -- such as child care issues or health conditions -- reasons that some benefits can stay in place.

It's a tale of a job market in imbalance: Employers are struggling to attract and retain staff as the reopening spurred a hiring surge, because some workers are still not ready to return to work. Many fear infection, or worry about adequate care for their children or elderly relatives.

All of this is creating an unprecedented mismatch between worker supply and demand.

It's also what's behind the recent increase in hourly earnings, as companies are upping pay to keep staff. Average hourly earnings rose by 10 cents to $30.40 in June, a slightly smaller increase than in the prior two months.

While many economists rejected claims that pandemic-era jobless benefits are keeping people comfortably at home and away from work, a number of states have cut the special programs ahead of the September deadline.

But that didn't move the needle much in June yet. Early data from states that ended those programs shows that the move didn't push workers to resume their job searches, said Cailin Birch, global economist at The Economist Intelligence Unit, in emailed comments.

Once all 50 states phase out the benefits in September, there could be a noticeable effect, she said. Benefits expire in 26 states by the end of July.

"More than this, however, we expect an additional few months of economic growth, more progress on Covid vaccinations and the resumption of in-person education in September to be the main factors driving a stronger increase in labor-force participation in the fall," Birch added.

An uneven recovery

While workers across the board struggled during the pandemic, the economic hardship was mostly shouldered by lower income workers and non-White workers.

This is still reflected in the jobless rates for demographic groups.

The unemployment rate for Asian workers rose to 5.8% in June, from 5.5% in May, registering the biggest percentage point increase, even though it remained below the rate for the general population.

The jobless rates for Hispanic and Black workers each rose 0.1 percentage points, to 7.4% and 9.2%, respectively. This puts the rate for both populations far above that of the overall population.

The White unemployment increased to 5.2% from 5.1% in May.

Women were also disproportionately affected last year, but they made up nearly half the job gains in June.

--Tami Luhby contributed to this article.

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