WORKSPAN DAILY |
U.S. Economy Rebounds in May, Adds 2.5 Million Jobs
After a historically bad April, the United States economy showed early signs of recovering from the devastating effects of the COVID-19 pandemic.
The U.S. Labor Department report revealed on Friday that 2.5 million jobs were added in May and the unemployment rate fell to 13.3%. It was the largest monthly gain in new jobs since the Bureau of Labor Statistics started tracking in 1939.
The numbers were in stark contrast to the ADP’s jobs report on Wednesday, which found that 2.76 million jobs were lost in May.
The Labor Department noted that millions of workers were misclassified during the pandemic as “employed but not at work,” when they should have been counted as “unemployed on temporary layoff.” If it weren't for those misclassifications, the unemployment rate would have been higher — around 19.2% in April and 16.1% in May, not including seasonal adjustments.
Even so, economists' estimates for the May report were off by a significant margin, with expectations around 20% and about 8 million jobs lost. The gradual reopening across the country, however, led to job gain instead of losses.
Restaurants and bars, health-care employers and construction were among the sectors that drove the May job market improvement, according to the 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.
There’s also belief that the federal stimulus money from the Paycheck Protection Program enabled many businesses to bring workers back on payroll.
“The economy is still being very much buffered by stimulus,” Michelle Meyer, head of U.S. economics at Bank of America told The New York Times. “When that starts to wane, we will learn a lot more about the underlying health of the recovery.”
About the Author
Brett Christie is the managing editor of Workspan Daily.