2.5 million Americans went back to work in May. This reversed the trend of devastating job losses brought on by the coronavirus pandemic. With the surprising number of jobs gained last month, the unemployment rate fell from 14.7% down to 13.3%.
Almost half of the new jobs were in the leisure and hospitality industry, gaining 1.2 million new jobs after losing 7.5 million in April. 1.4 million jobs were also added at bars and restaurants as states began to relax social distancing measures and patrons slowly started venturing out to eat more.
The construction industry added 464,000 jobs, recovering about half of April’s losses. Education and health services gained 424,000 and retail jumped by 368,000 after losing 2.3 million jobs the previous month.
The report shocked many analysts, who were certain the report would reveal more bad news in the job market. According to Dow Jones, expectations were for 8.3 million jobs lost and a 19.5% unemployment rate.
Ethan Harris, head of global economics at Bank of America, says that this should be the turning point.
“May was this transition month. The layoffs were very high, but in the latter part of the month, rehiring started. This employment report is probably the peak of the disaster in the labor market,” said Harris.
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He then added “You’re going to have millions of jobs added in coming months. Our assumption is that only about half of the jobs that were lost come back over the course of the next three to six months.”
A Positive Outlook?
There was some indication that May’s numbers wouldn’t be quite as bad as many expected. This happened when ADP’s private payrolls report, which surfaced on Wednesday, showed only 2.76 million jobs were lost last month.
Tony Bedikian, head of global markets at Citizens Bank, said “Barring a second surge of Covid-19, the overall U.S. economy may have turned a corner, as evidenced by the surprise job gains today, even though it still remains to be seen exactly what the new normal will look like.”
Scott Anderson, chief economist at Bank of the West, is paying close attention to see if jobs in manufacturing and construction accelerated or decelerated, if layoffs are starting at the state and local government levels, or if job losses have started to expand into new sectors.
Anderson does see a glimmer of hope as the stay-at-home orders are being slowly lifted across the country.
“It seems like folks are beginning to venture out. We’ll see if the gains continue. The openings are happening a little faster than expected. We do worry about a second wave. We’re not out of the woods. (The) third quarter looks a lot stronger than we thought a month ago.”
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