- The Bureau of Labor Statistics said on Friday that American employers added 2.5 million pounds of pay in May, a shocking figure that defied economists’ expectations of 7.5 million lost jobs.
- The unemployment rate in the United States fell to 13.3% in May, offsetting forecasts of an almost record reading of 19%.
- Visit the Business Insider home page for more stories.
Economists were shocked on Friday when the Bureau of Labor Statistics said that American employers added 2.5 million pounds of pay in May, defying expectations of 7.5 million jobs lost. The surprise increase came in the wake of the record 20.5 million jobs lost in April.
The unemployment rate fell to 13.3%, breaking expectations of an almost record rate of 19%. The reading of 14.7% in April was the highest since the Great Depression of the 1930s.
The May report suggested that the US economy may have passed the peak of the devastation of the coronavirus pandemic. By the end of the month, the 50 states had relaxed at least some restrictions, even as the number of COVID-19 deaths in the United States exceeded 100,000.
“Today’s data suggests the US economy is more resilient than expected,” said Seema Shah, chief strategist at Principal Global Investors. “Certainly, the first signs suggest that the reopening of economies has already started to heal the labor market.”
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The report is “rather surprising,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The biggest payroll surprise in history, by a gigantic margin, is probably due to a wave of hidden re-hires. “
Details by sector
Many industries posted job gains in May after large losses in April. Employment and the hotel industry added 1.2 million jobs after losing 7.5 million jobs in April, with employment in food services and drinking places accounting for most of the gain.
Education and health services, retail trade and other service industries also created jobs in May after losing jobs in April. Yet government, information and transportation workers suffered another month of job losses.
The number of unemployed workers on temporary layoff fell to 15.3 million in May from 16.2 million in April. Friday’s report noted that the number of permanent job losers rose to 2.3 million, up nearly 300,000 from April.
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“We had a bottom line about five or six weeks ago,” Amy Glaser, senior vice president of recruiting agency Adecco USA, told Business Insider. She said the company had seen a steady increase in May and an explosion in customer orders, applications and hiring activity in the past week.
Job offers as an indicator
Jobs on Indeed also improved slightly in the last few weeks of the month, but remained worse over the year.
“We’ve seen an acceleration in the pace of job openings in the past four weeks,” Indeed economist Nick Bunker told Business Insider. “But the trend and the job vacancies are still far below what we saw at this point last year; they are still down 34%. “
The increase in hiring in the first weeks of the month may be due in part to new practices which can have lasting implications for the labor market. Seniors Helping Seniors, a company that matches caregivers with seniors, had to go online.
“This is not something we imagined doing two months ago,” said Daniel Business, vice president of operations for the company, at Business Insider. But going online has made hiring faster – necessary as demand for the service has increased. The company said website traffic increased 14% from the previous quarter.
While this early rebound is a good thing, it’s still a month of data.
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“Job growth up 2.5 million and the unemployment rate down more than one percentage point are positive developments, but it is not known how long it will last,” said Bunker.
He continued: “In addition, the job market is still in dire straits, with only 87% of the jobs it was in before the coronavirus crisis started. “
Will the trend continue?
Economists will watch for signs that the May report is part of a trend. Even if states reopen, uncertainty remains.
Sarah May, a bartender in White Lake, Michigan, is worried about returning to work, as state bars and restaurants are allowed to reopen at half capacity on Monday.
May, who was laid off when the state closed in March, finally started receiving unemployment benefits in April after she was initially refused because her wages without tips were insufficient.
“I don’t want to go back to work 50% and make less money,” May, the primary caregiver of her disabled daughter, told Business Insider. “I don’t want to risk the people who matter to me. “
This uncertainty could still have repercussions on consumer spending, which represents around 70% of the United States’ gross domestic product. In addition, while personal savings were boosted by government benefits, consumer spending fell in April.
The additional $ 600 added to weekly unemployment benefits under the Care Act is scheduled to end in July, which could further affect the way people spend.
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