2.5m Americans found jobs in May
Unemployment rate falls to 13.3% from 14.7% in April as employers bring workers back
The US economy added 2.5 million jobs last month, driving unemployment down to 13.3 per cent as states loosened lockdowns. For weeks, economists had been warning that unemployment in May could hit 20 per cent or more, rivalling what was seen during the depths of the Depression in the 1930s. Wall Street surged on the news, with the S&P 500 gaining 2.2 per cent in 15 minutes. US President Donald Trump hailed the news, saying, “we had the greatest economy ... And that strength let us get through this horrible pandemic ... I think we’re doing really well”. The May job gain suggests that thousands of companies reopened and rehired more quickly than analysts had forecast
The job market unexpectedly reversed its free fall in May as US employers brought back millions of workers after pandemic-induced layoffs and the unemployment rate declined.
Tens of millions remain out of work, and the unemployment rate, which fell to 13.3 per cent from 14.7 per cent in April, remains higher than in any previous postwar recession.
But employers added 2.5 million jobs in May, the Labor Department said yesterday, defying economists’ expectations of further losses and offering hope that the rebound from the pandemic-induced economic crisis could be faster than forecast.
Still, job openings remain far below normal, and the trillions of dollars in government assistance that have helped keep the economy on life support may be nearing their end.
The report noted that “employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade,” even as jobs in the government continued their decline.
“What this is telling us is that at least part of the pain in April was due to people being laid off or furloughed who still had very strong connections to their employers,” said Ernie Tedeschi, an economist at Evercore ISI in Washington. “As good and surprising as this report was, this may just be the low-hanging fruit. These may have been the easiest workers to bring back.”
The rehiring bonanza at restaurants helped to lift payrolls.
Key sectors revive
Restaurants and bars, health care employers and construction were among the sectors that drove the May job market improvement, based on the Labor Department’s report.
About 1.4 million people gained or took back their restaurant jobs, even as hotels continued to shed workers. About 460,000 were hired or rehired in construction, 370,000 in retail, and 390,000 in health care and social assistance. That latter boost came heavily from dentist’s offices, which took back some 245,000 workers.
The data tells the story of an employment rebound as state and local economies began to reopen and Paycheck Protection
Program checks went out, spurring rehiring and bringing workers back onto payrolls.
“The economy is still being very much buffered by stimulus,” said Michelle Meyer, head of US economics at Bank of America. “When that starts to wane, we will learn a lot more about the underlying health of the recovery.”
Meyer noted that more than half of the job gains in May — 1.4 million — were in restaurants and bars, many of which probably received assistance
under the government’s Paycheck Protection Program. Yesterday’s report suggests that the programme, along with other elements of the government’s response, helped offset at least some of the economic damage.
Stimulus bill in doubt
The jobs report could deflate congressional efforts to enact another round of stimulus.
The unexpected upswing in the monthly jobs report threw into doubt the prospects of another coronavirus stimulus bill, threatening to further temper Republicans’ willingness to provide additional relief.
“Goodbye phase 4,” a Republican official wrote in a text message Friday morning after the numbers were released, encapsulating a sense among lawmakers and aides that the figures would sap what little enthusiasm there was for more.
Others conceded privately that some relief package would likely still materialise, but with a substantially lower price tag and a narrower focus on modifying existing programs, rather than creating new ones.