May SURPRISE: US economy ADDS 2.5 million to payrolls

Report shatters experts' predictions, jobless rate improves as coronavirus eases

SKY News
June 05, 2020 - 8:56 am
Pres. Trump promoting the reopening of America after coronavirus shutdowns

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WASHINGTON – The U.S added 2.5 million jobs in May as the businesses began to reopen after coronavirus-related closures, dropping the unemployment rate to 13.3 percent, according to the Labor Department.

The May jobs report shattered economists’ expectations of a loss of nearly 8 million jobs that was expected to send the unemployment rate to 19 percent or above.

The report showed an unexpected rise in the number of non-farm payrolls, averting what economists expected would be a rise in the jobless rate to the highest level since the Great Depression amid the coronavirus pandemic.

The Labor Department released the May jobs report Friday at 8:30 a.m. ET. Here were the main results from the report, compared to Bloomberg consensus data:

  • Change in non-farm payrolls: +2.509 million vs. -7.5 million expected and -20.687 million in April
  • Unemployment rate: 13.3% vs. 19.0% expected and 14.7% in April
  • Average hourly earnings month on month: -1.0% vs. +1.0% expected and +4.7% in April
  • Average hourly earnings year on year: +6.7% vs. +8.5% expected and +8.0% in April

The Labor Department’s surveys captured the period including the 12th of the month, meaning the May report included only the very early stages of reopening in some parts of the U.S. amid the coronavirus outbreak.

Ahead of the May jobs report, some other surveys showed encouraging drops in new job cuts relative to April, offering some hope for a further easing in payroll declines in the BLS report. The closely watched ADP report on private payrolls released Wednesday showed private employers cut 2.76 million jobs in May, or less than one-third the 9 million expected, and just a fraction of the 19.6 million from April. Economists expect the Labor Department report will show private payrolls dropped by 7.25 million in May.

“The ADP report isn't always a reliable predictor of the BLS data, but it suggests that the pace of job loss moderated noticeably between April and May, even though it remained substantial relative to pre-COVID-19 norms,” JPMorgan economist Daniel Silver said. “This is a message broadly consistent with some other related signals, and the labor market likely has benefitted from the easing of restrictions on activity in many places in recent weeks.”

 

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