Unemployment falls as United States adds 2.5 million jobs

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Still, after weeks of dire predictions by economists that unemployment in May could hit 20 per cent or more, the news that the economy added a surprising 2.5 million jobs last month is evidence that the employment collapse most likely bottomed out in April.

The economy beating expectations by 10 million jobs (more than Michigan's population) and the unemployment rate falling instead of rising show that the transition back to strong economic growth began earlier than many expected.

"Even this very large official increase understates the increase in the unemployment rate from a historically-comparable perspective because it counts an extra 4.9 million people who were "not at work for other reasons" as employed and also because 6.3 million people have left the labor force since February", wrote PIIE senior fellow and Harvard professor Jason Furman, and Harvard Kennedy School research associate Wilson Powell.

The report attributed the improvements to "a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it".

For the survey including the unemployment rate, the Labor Department noted inconsistent classifications of workers due to pandemic-related effects meant the unemployment rate would have been about 3 percentage points higher than was actually reported.

Professional and business services added 127,000 jobs in May, after losing 2.2 million jobs in April.

In March, President Trump and Congress approved a massive stimulus package created to provide financial relief during the pandemic.

The increase in the number of jobs - which mirrored a similar bump in the USA - came after three million jobs were lost over March and April and about 2.5 million more had their hours slashed. By contrast, unemployment for whites fell to 12.4% from 14.2% in April.

While unemployment was down in May for whites and Hispanics, it remained little changed for blacks and Asians.

Unemployment falls as United States adds 2.5 million jobs
Unemployment falls as United States adds 2.5 million jobs

Still, the unemployment rate in May rose to 13.7 per cent, the highest level in more than four decades of comparable data.

That's good news for an industry that saw its biggest drop in production in March since 1946. American Airlines, for example, said this week that it would fly 55% of its US routes in July, up from just 20% in May.

Restaurants and bars added almost 1.4 million jobs in May when they reopened across the country, according to the Bureau of Labor Statistics. Women with children under age six also saw slower job gains than those with older children.

This category is important because it excludes part-timers who can't work as many hours as they'd like because of poor business conditions.

Health care hires increased significantly in May, driven by the reopening of the reopening of dental offices, which added 244,800 jobs.

Within the services sector, only the transportation and warehousing, utilities, and information industries extended job losses from April.

The unemployment rate is still at its highest level since the 1930s era of bread lines and soup kitchens.

In the aftermath of the pandemic, US employers would have to replicate the strong gains from the May jobs report for the next seven months to return the country to where it was in February. But the Labour Department for the second straight month acknowledged making errors in counting the unemployed during the coronavirus outbreak, saying the real figure is worse than the numbers indicate.

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