Behind the USA unemployment figures: five key points from May's jobs report

Monday, 08 Jun, 2020

Smashing expectations, US employment rose by 2.5 million in May, the Department of Labor announced Friday, with the unemployment rate falling to 13.3%, down from 14.7% in April.

The increase in the unemployment rate, which topped the previous record of 13.1 per cent set in December 1982, came as more people started looking for work.

US unemployment dropped unexpectedly in May to 13.3 per cent as reopened businesses began recalling millions of workers faster than economists had predicted.

Over the months of March and April, 3 million jobs were lost across Canada, and about 2.5 million more Canadians had their hours cut.

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. In April, almost 20.7 million jobs were lost, as the USA slammed the brakes on its economy in a desperate effort to slow the spread of the pandemic.

In March, President Trump and Congress approved a massive stimulus package created to provide financial relief during the pandemic. Additionally, the number of permanent job losses increased by 295,000 to 2.3 million.

Notably, the unemployment rates improved for adult men, adult women, white and Hispanic Americans but remain relatively unchanged for teen, black and Asian Americans. Still, the unemployment rate ticked up to 13.7 per cent in May, a postwar record as people returned to the labor force. "Local governments shed 310,000 education jobs over the last month". As of late May, all US states had been in some phase of reopening.

But some key sectors are still in bad shape: While the leisure and hospitality sector led the pack with a gain of 1.2 million jobs in May, after losing 7.5 million jobs in April, and health care made a big comeback with 321,000 jobs (led by dentists, who gained 244,000 jobs), other sectors are still contracting. More than 10 million people indicated they were working part-time because of economic conditions, either business conditions have worsened or they could only find part-time work. Women with children under age six also saw slower job gains than those with older children.

Even if just one-third of the US job losses turn out to be permanent, that would leave roughly 10 million people out of work. Oxford Economics estimates that the economy will regain 17 million jobs by year's end, a huge increase by historical standards.

"The report we put out yesterday was just through about the middle of May, and we know that a lot of the most important reopenings didn't begin until later in the month or earlier this month, or still are to take place", Scalia said.

At a White House press conference, U.S. President Donald Trump touted the new job numbers, saying that the job surge is "widespread" and the nation will go back to have the "greatest economy" in the next few months. The Purchasing Managers' Index (PMI) stood at 43.1 percent in May, up 1.6 percentage points from the April reading, indicating a manufacturing contraction for the third straight month, the Institute for Supply Management (ISM) reported earlier this week. With the Great Recession, it took until 2016 for the unemployment rate to return to pre-downturn levels.