The American economy had never seen a one-month drop as steep as April’s loss of 20.5 million jobs. Nor had it ever seen a one-month rebound as sharp as May’s, when 2.5 million people returned to work, lowering the unemployment rate to 13.3 percent, from 14.7 percent, and allaying fears of a depression-like contraction ahead.
A survey of economists by FactSet just before the Labor Department released its May report indicated expectations that the unemployment rate would hit 19.8 percent with an additional loss of 8.5 million jobs, with a sharp reversal in subsequent months, reflecting the reopening of the economy. Today’s report is taking those economists by surprise, pointing both to less severe immediate consequences on the economy from the coronavirus and quicker returns from the reopening of society, which began in April in several parts of the country.
The number of unemployed on temporary layoff decreased by 2.7 million in May to 15.3 million, following a sharp increase of 16.2 million in April, though the number of permanent job losers continued to rise, increasing by 295,000 in May to 2.3 million. The number of unemployed who were jobless less than five weeks decreased by 10.4 million to 3.9 million. They made up 18.5 percent of the unemployed. The number of unemployed who were jobless five to 14 weeks rose by 7.8 million, to 14.8 million, accounting for about 70.8 percent of the unemployed. The long-term unemployed, jobless for 27 weeks or more, numbered 1.2 million, an increase of 225,000 over the month. They represent 5.6 percent of the unemployed.
The number of people employed part time for economic or involuntary reasons–because their hours have been cut back or they could not find full-time work–was at 10.6 million, up by 6.3 million since February but not much changed since April.
The biggest gainer in jobs in May had been the biggest loser in April: leisure and hospitality, including bars and restaurants. The sector added 1.2 million jobs, a vast improvement but still far from recovering the 7.5 million jobs lost in April and an additional 743,000 loss in March. Hotels and motels still lost more jobs in May (148,000).
Construction was another sector that saw big improvements, increasing employment by 464,000 in May and gaining back almost half of April’s decline of 1 million. Much of the gain occurred in specialty trade contractors (325,000 jobs), with growth about equally split between the residential and nonresidential components. Job gains also occurred in construction of buildings (105,000), largely in residential building.
Education and health services added 424,000 jobs after a decrease of 2.6 million in April, with gains in dentists’ offices (245,000) and other medical practitioners (73,000) and physicians (51,000). Child care services also added 44,000 jobs. But losses continued in nursing homes and assisted living facilities (-37,000) and hospitals (-27,000).
In retail, the sector added 368,000 jobs, after a loss of 2.3 million in April. Others service industries saw an increase of 272,000 jobs after a decline of 1.3 million in April. Manufacturing employment rose by 225,000, after an April decline of 1.3 million.
Losses were steepest in government, with a decline of 585,000 jobs, adding to a decline of nearly 1 million jobs in April. Most of May’s decline was in local government (487,000 jobs), and most of that was the result of education job losses.
But job losses in March and April were steeper than the Labor Department had initially reported, with 642,000 more jobs lost than the 21.4 million first reported, bringing the two months’ job losses to 22 million. That number matters in terms of the steepness of the recovery ahead. While payrolls are picking up again, the recovery may be a slog until jobs lost are restored, and many economists believe that millions of jobs may not return at all. But many economists had also predicted a 20 percent unemployment rate for May.
A month-over-month downside: while average hourly earnings for all employees on private payrolls had zoomed up $1.35 in April, the rate fell 29 cents to $29.75, in May. The decreases reflect job gains among lower-paid workers.