The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the stunning U.S. jobs report that show employment regains of 2.5 million jobs in May. Unemployment fell to 13.3% as the U.S. economy starts to recover from the coronavirus lockdown.
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The numbers: The U.S. regained 2.5 million jobs in May and the unemployment rate fell to 13.3%, confounding Wall Street expectations for another big wave of layoffs and signaling the economy began to revive last month from the worst economic crisis since the Great Depression of the 1930s.
Stock prices surged after the surprisingly upbeat May employment numbers. Economists polled by MarketWatch had forecast a loss of 7.25 million jobs. The unemployment rate had been expected to rise to 19% from a post–World War II record of 14.7% in April.
Every state began to reopen their economies to some degree in May, and the Bureau of Labor Statistics said 2.7 million people who had temporarily lost jobs amid the pandemic returned to work.
A slew of additional recent economic indicators also suggest economic growth has started to revive, if just marginally.
What happened: Bars and restaurants, the segment of the economy worst hit by the pandemic, recalled 1.4 million workers following a loss of more than 6 million positions in the prior two months. Many businesses had been either closed or forced to operate at reduced capacity given strict rules on social distancing.
Employment rebounded by 464,000 in construction, by 368,000 in retail and by 225,000 in manufacturing.
The health-care industry also began to recover from record job losses in April, boosting employment by 312,000. The fear of catching the coronavirus at hospitals and doctor and dental offices had led to a near-collapse in demand for nonemergency treatments.
In another oddly good sign, average hourly wages declined in May. Average earnings had soared in April largely because job losses fell most heavily on workers in lower-paying lines of work, taking their pay out of the arithmetic. The decrease in pay is another indicator that employees in retail, restaurants and other service industries started to go back to work.
The only segment to shed another large chunk of jobs was government. Employment fell by 585,000, mostly reflecting school closures that put bus drivers, cafeteria staff and others out of work.
The unemployment rate, meanwhile, slipped to an official 13.3% in May from a postwar record of 14.7% in April.
The BLS said the rate would have been three percentage points higher if households surveyed by the government had correctly described their job status. Some who have been put of work by the pandemic indicated they were “employed but absent from work.”
The record loss of jobs in April was revised up slightly to 20.7 million. Job losses in March were raised to 1.4 million from 881,000.
Even after the return of 2.5 million jobs in May, the number of working Americans is almost 20 million lower compared to the last month before the pandemic began.
Big picture: The collapse in the labor market may have come to a halt sooner than expected as more people return to work, but it could take a long time to pick up the pieces.
COVID-19 cases are still rising in the U.S., many companies are operating at limited capacity, and social-distancing practices are likely to hamstring others that rely on crowds to eke out a profit. The sometimes violent protests over policing practices might also be a temporary setback for businesses reopening in some of the larger cities.
Washington is considering more federal aid, including extended unemployment benefits that will be needed if millions of Americans find out there is no job to which they can return.
What they are saying? “As abruptly as the economy was pushed into recession, the reopening is helping to claw back the enormous loss of jobs,” said senior economist Sal Guatieri of BMO Capital Markets. “The May report provides a sense of optimism that most workers will be recalled in coming months.”
“Although today’s report feels like a relief for many, it’s important to remember the labor market still faces an unemployment rate at the highest level since the Great Depression with tens of millions of Americans still out of work,” said senior economist Daniel Zhao of Glassdoor. “While the labor market may be on the path to recovery, there is still a long way to go until the labor market returns to pre-crisis levels and makes up for lost growth.”
President Donald Trump, in a lengthy set of remarks in the Rose Garden that ranged well beyond the stated topic, the nonfarm-payrolls report, said he foresaw the economy’s rebound prospects as better than the best-case-scenario V-shaped recovery. A rocket ship, he suggested, would be a more apt metaphor.
Trump went on to invoke the name of George Floyd, the 46-year-old African-American man who died in Minneapolis police custody on May 25, setting off a wave of demonstrations against police brutality and prejudice around the country and beyond, in discussing the jobs-report surprise.
Trump’s likely opponent in November, Vice President Joe Biden, said he was disappointed to hear Trump “crowing” about the data — essentially, said Biden, hanging a “Mission: Accomplished” banner — when there remains so much work yet to do.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.