The Institute for Supply Management’s Manufacturing Report on Business Purchasing Managers' Index grew to 52.6%, with manufacturing returning to growth after one month of contraction and the overall economy speeding up growth in its second consecutive month of expansion. Manufacturing growth was faster in some sectors, such as Food, Beverage & Tobacco or Wood Products, while survey respondents from other sectors such as Petroleum or Miscellaneous Manufacturing noted that demand was still low but starting to stabilize. New Orders and Production showed strong increases in June, and inventories and prices began to increase. However, employment and new export orders continued to contract, albeit at a slower rate. The ISM Chair commented that manufacturing in June was entering an expected expansion after three straight months of COVID-19 related disruptions.

In the minutes for June’s FOMC meeting, the expected path for the prime rate was estimated to remain at or close to the current 0.0% - 0.25% rate until late 2023, although a couple of members had cautioned that long term low interest rates could “pose significant risks to financial stability”. The Committee estimated that Q2 GDP would have an historically large decline, and noted that while there were encouraging signs of recovery beginning for employment, new job gains were much less than job losses. The economic outlook was for improvement throughout the rest of the year as COVID-19 related restrictions were rolled back, but noted that a second wave of business closings and social limitations would lower GDP, employment and inflation below current projections, with some scenarios predicting a protracted wave of reduced economic activity.

Employment rose by 4.8 million in June, dropping the unemployment rate by 2.2% to 11.1% as economic activity began to resume after COVID-19 restrictions were eased. As with previous reports for March, April, and May, a misclassification of laid off workers is likely to have artificially lowered the unemployment rate, but in June the effect was estimated at a much lower 1% error. Total nonfarm employment in June was 14.7 million, down -9.6% from before job losses began in February. Significant numbers of jobs were created in areas including leisure and hospitality (+2.1 million), retail (+740,000), education and health services (+568,000), and manufacturing (+356,000). Average hourly earnings dropped by ‑$0.35 to $29.37, but this was primarily due to large job gains for lower paid workers. The U-6 unemployment rate, which includes part time and marginally attached workers, dropped from 21.2% to 18.0%, compared to 7.0% in February.