- The May jobs report shocked economists when it showed a declining unemployment rate and net positive job creation, signaling that a rebound from the coronavirus pandemic started earlier than expected.
- Still, economists caution that the overall labor market is weak and has a long way to go before erasing the shock of the pandemic.
- Here are six charts that break down the report beyond the headline numbers.
- Visit Business Insider’s homepage for more stories.
The Friday May jobs report was a surprise and could be a sign that an economic recovery from the depths of the coronavirus pandemic may have already started.
US nonfarm payrolls increased 2.5 million in May, from a record 20.5 decline in April, according to the Friday report from the Labor Department. The unemployment rate also decreased to 13.3% from 14.7%. Economists had expected a loss of nearly 8 million jobs and a surge in the unemployment rate to nearly 20%.
“This is an eye-popping headline number,” Martha Gimbel, an economist at Schmidt Futures, told Business Insider. However, the unemployment rate is still higher than it ever reached in the Great Recession, she added.
And, while the US economy added jobs in May, it would have to add nearly 20 million more to reach pre-coronavirus levels, indicating a long road ahead. It’s important “to keep our eye on the level, not the delta,” said Gimbel, referring to the size of the change.
While a step in the right direction, the May report is only one month of data — the US will have to wait for June nonfarm payrolls to see if this is the start of a positive trend. And, even though the May report marks an improvement from the wreckage seen in April, it still paints a picture of a struggling labor market deeply affected by the shock of the coronavirus pandemic.
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The unemployment rate unexpectedly fell by over three percentage points to 13.3%.
While this is an improvement from the 14.7% unemployment rate seen in April, it’s still a staggering 9.8% increase from the historic-low rate of 3.5% in February.
In addition, one month of data is not indicative of a trend.
“This bounce back might last a few more months, but then it could turn into a slower, steadier crawl when it comes to employment growth,” Nick Bunker, an economist at Indeed, told Business Insider.
A broader measure of unemployment, which includes workers who say they want a job but haven’t been actively looking for one, and people who are working part-time but want a full-time job, remains above 20%.
Looking at this broader measure of underemployment is a way of gauging major market slack, Michelle Meyer, chief US economist at Bank of America, told Business Insider.
The metric helps “realize some of the deeper challenges the economy is facing,” she said.
Unemployment for white and Hispanic or Latino workers dropped over the last month, while the unemployment rate for black Americans ticked slightly up.
“It’s kind of the same story where black people are always left behind,” Olugbenga Ajilore, senior economist at the Center for American Progress, told Business Insider.
He continued: “There’s more jobs, but they’re not the jobs that African Americans have.”
Roughly 2.5 million non-farm payroll jobs were added in the month, a sharp turnaround from the over 20 million jobs lost in April.
While the US economy added jobs in May, total losses since February still total 19.6 million — a staggering drop.
“The way back is long,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Friday note. Even including the jobs added in May, total nonfarm payrolls are still at levels last seen in 2011, he said.
After being hit especially hard over the previous two months, the leisure and hospitality industry added a net 1.2 million jobs in May. Meanwhile, governments, especially local governments, continued to lose hundreds of thousands of jobs.
Jobs added are “welcome gains,” especially “as long as the health consequences aren’t offsetting,” Elise Gould, an economist at the Economic Policy Institute, wrote in a Friday note.
Still, the public sector losses are of “particular concern,” she said.
“It’s important to remember that public sector austerity in the recovery from the great recession meant that public school employment never regained its 2008 levels,” said Gould. “Without sufficient relief to state and local governments, more cuts will come.”