PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

June Jobs Data: A Tale of Two Surveys

By at 2 July, 2021, 2:47 pm

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by RAYMOND J. KEATING –

In certain months, the two surveys – the establishment payroll survey and the household survey – that make up the monthly employment report will actually diverge quite markedly. Eventually, the data align, but it’s not completely atypical for this to occur in a month here and there. And that was the case with the June jobs report released by the U.S. Bureau of Labor Statistics on July 2.

Healthy Gains in the Establishment Survey

The establishment survey showed a healthy gain of 850,000 in nonfarm payroll employment. As reported, “Notable job gains in June occurred in leisure and hospitality, public and private education, professional and business services, retail trade, and other services.”

For further perspective, it was noted that nonfarm payrolls were up by 15.6 million since April 2020, but still down by 6.8 million from the pre-pandemic February 2020 level.

Household Survey Reports Decline in Employment

Meanwhile, the household survey told a very different jobs story. It actually showed an 18,000 decline in employment in June. The employment-population ratio was unchanged at 58.0 percent (which stood at 51.3 percent in April 2020 but at 61.1 percent in February 2020), with the labor force participation rate also unchanged at 61.6 percent (which stood at 60.2 percent in April 2020 but at 63.3 percent in February 2020).

The number of unemployed also increased in June by 168,000.

Self-Employment Drops

For good measure, the number of unincorporated self-employed dropped significantly in June. After a big jump in May – from 9.65 million in April to 10.0 million in May – the number of unincorporated self-employed declined to 9.84 million in June.

Which Survey Trend Will Prevail?

Hopefully, the economy will continue to recover, and the June household survey data will turn out to be a brief pause on a path of recovery, and eventually, expansion. At the same time, there are no guarantees in life, including when it comes to the economy. Will the coming months look like the June establishment survey or the household survey?

Given the millions of small businesses closed, will the self-employed data resume some much-needed strong growth, as we saw in May? I expect the jobs recovery to continue. However, the level of entrepreneurship and small business activity will dictate how fast and how far that will go, and small business remains the biggest question mark on this road back from the economic woes of the pandemic.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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