US economy adds 2.5 million jobs in May, unemployment falls to 13.3%
The US mounted a surprise recovery from the coronavirus crisis by adding a record 2.5 million jobs last month, the feds said Friday, stunning experts who predicted more bloodletting in the labor market.
The Bureau of Labor Statistics’ monthly jobs report showed the unemployment rate falling to 13.3 percent as states began to lift virus-related lockdowns. That’s an improvement from April’s 14.7 percent unemployment although it is still higher than any other point since the Great Depression.
The data suggest the government’s efforts to backstop the economy during the pandemic have helped kickstart a recovery, blindsiding economists who predicted millions more lost jobs and unemployment at or near 20 percent.
But experts cautioned that the nation is not out of the woods yet as 21 million Americans were still out of work last month.
“It would be absolutely premature to announce the victory,” Yelena Shulyatyeva, senior US economist at Bloomberg Economics, told The Post. “Will we have demand for all these businesses to reopen? Will we go to the restaurants at the same kind of rate as we were before the crisis, or will we travel as much? All these questions still remain.”
While the numbers reflect early returns on the first stage of reopening the economy, the surprise might be more closely tied to the fact that the second round of Paycheck Protection Program funding finally hit the small businesses that needed it most after some major stumbles in round one.
“The difference was that more people got hired back than expected,” explained George Pearkes, macro strategist at Bespoke Investment Group. “That’s down to PPP and the natural occurrence of businesses reopening. The correlation between the two is very key.”
Several industries added jobs last month, but restaurants and bars devastated by pandemic lockdowns led the way with 1.4 million positions, accounting for about half of the total gain, the feds said. The construction and retail sectors also saw sharp increases, adding 464,000 and 368,000 jobs, respectively, the feds said.
“The sectors that got a lot of PPP loans — construction, retail, restaurants — that’s where we saw a lot of the job gains in May,” Curt Long, chief economist and vice president of research at the National Association of Federally-Insured Credit Unions, told The Post. “With the prospect of reopening now a reality, or it looks like it could be a reality for people in the near future, it now makes sense for a lot of those people to rehire workers back.”
The Trump administration crowed about the report, saying it showed the economy is making a strong recovery from the coronavirus. President Trump tweeted that the numbers were “stupendous” and “INCREDIBLE!”
“It appears the worst of the coronavirus’s impact on the nation’s job markets is behind us,” US Labor Secretary Eugene Scalia said in a statement.
But not all of the data was rosy. The feds admitted the unemployment rate could actually be about 3 percentage points higher because of continued issues with how certain workers are classified. And the number of “permanent job losers” rose by 295,000 to 2.3 million last month, the report says.
“That gets at the threat that is still there, which is demand is still really low right now,” Long told The Post. “Even as businesses are starting to reopen, there are some that are still really vulnerable right now.”
With Post wires