May jobs report brought surprisingly good news – the job market may be recovering well ahead of schedule.
The US unemployment rate surprisingly fell to 13.3% in May, as the economy gained 2.5 million jobs. It was the largest monthly gain in new jobs since the Bureau of Labor Statistics started tracking the data series in 1939.
The unemployment rate last month soared to 14.7% in April 2020 as businesses shut during the coronavirus lockdown.
Economists’ expectations for the May jobs report were around 20% unemployment and about 8 million jobs lost. So, how could the experts be so wrong? For one, this economic shutdown was engineered. Making it hard for economists to predict how the real world would behave.
The gradual reopening of the economy actually added new jobs rather than eliminating further positions. Construction jobs, for example, increased by 464,000 in May, gaining back nearly half of what they lost in April. Construction activity is part of the first phase of reopening. Jobs also returned in retail, education and health services. Health care hires were boosted by doctor’s and dentist’s offices reopening, adding 244,800 jobs.
Part-time workers accounted for about two-fifths of the employment growth in May at nearly 10.5 million people. Compare that with 4.2 million part time workers in February.
The employment-population ratio, which measures how much of the working age population is employed, rose 1.5 percentage points to 52.8%. That comes after an 8.7 percentage point collapse in April — when the ratio hit its lowest level since records started in 1948. Despite the increase in May, the ratio is still lower than ever before.
“These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain it,” said William W. Beach, commissioner of the Bureau of Labor Statistics, in a statement.
The recovery is a good sign that the hoped-for rebound from the pandemic downturn is going to happen faster than anticipated. Hopes for a V-shaped recovery, which had been all but abandoned following the April labor market numbers, might be revived. Economists and workers alike hope that job losses were temporary, and that job gains are permanent.