MNI REALITY CHECK: US June Payrolls To Miss More Biz Closures

By Brooke Migdon

     WASHINGTON (MNI) - U.S. payrolls are set to rise in June, higher for a

second straight month as figures due Thursday will fail to pick up a second

"wave" of Covid-19 triggered business closures in some of the nation's most

populous states. The nearly 3.1 million median gain forecast by Bloomberg's

survey of analysts would overtake May's surprise 2.5 million payrolls increase

as the largest monthly gain on record.

     Recruiters and industry leaders told MNI that more government funding will

be crucial to prevent further business fatalities and help keep the economy

afloat.

     Key points from comments to MNI ahead of the July 2 Bureau of Labor

Statistics monthly employment report:

     **Overall payrolls growth should slow in the latter half of the summer if

government aid programs are not extended. The unemployment rate should hold

relatively steady in the mid-teens.

     **June's survey period missed a second round of Covid-19 business closures

in large states like Texas and Florida, which occurred in the final weeks of the

month.

     **Construction payrolls were up across all regions in June, with roughly

26% of firms indicating they brought furloughed or terminated employees back to

work.

     YVONNE ROCKWELL, FRANCHISE OWNER AT EXPRESS EMPLOYMENT PROFESSIONALS IN

SANTA CLARITA, CALIFORNIA

     An increase in job placement in June largely reflected individuals working

for new employers rather than returning to their old jobs, Rockwell, whose

business increased 61.7% month-over-month, said in an interview.

     "We saw a lot of first-time users" this month, she said, adding that she

saw "a lot of movement from company to company."

     Rockwell said demand for skilled labor skyrocketed in June, with business

increasing by approximately 300% year-over-year for a specialized recruiting

division focusing on professional placement at the managerial level.

     TOM GIMBEL, CEO AT LASALLE NETWORK

     Fewer employers were looking for temporary labor in June, a leading

indicator which typically signals the direction of overall monthly payrolls

growth. Jobs in temporary help services grew by 39,100 in the BLS' May jobs

report.

     "Not seeing a bounce back is concerning," he said of demand for temporary

staffing, adding that the U.S. did not see a "rush to the labor market this

month."

     Gimbel said the unemployment rate, which fell to 13.3% in May, should

remain relatively unchanged in the mid-teens in Thursday's report, but the U.S.

economy will likely be worse-off in July and August when enhanced unemployment

insurance benefits established as part of the CARES Act are terminated and funds

from the Paycheck Protection Program have been used up.

     The U.S. Senate Tuesday passed an extension of the small business loan

program just hours before it was set to expire with billions of dollars still

unused.

     FRANK FIORILLE, VICE PRESIDENT OF RISK, COMPLIANCE AND DATA ANALYTICS AT

PAYCHEX

     "The number held steady, it was pretty flat from last month," he said of

small business payrolls growth, referencing Paychex data collected from 300,000

small businesses across the country.

     Fiorille said that though job growth was largely unchanged from last month,

average hourly wages and the average workweek both inched up in June, with

weekly earnings up 4%.

     Most businesses in the Paychex data are operating with approximately 70% of

their pre-pandemic staff. That number could shrink in coming months as surging

Covid-19 infections in some states force businesses to close for a second time,

he added.

     KEN SIMONSON, CHIEF ECONOMIST AT THE ASSOCIATED GENERAL CONTRACTORS OF

AMERICA

     Roughly 26% of construction companies brought back workers in June, though

another 27% reported furloughing or terminating employees, Simonson told MNI.

     He added that 12% of firms in AGC surveys indicated they would likely

furlough or terminate more workers in the next 4 weeks, but 17% said they expect

to bring back more workers.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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