Unemployment Rate Falls to 13.3%, Economy Adds 2.5 Million Jobs in May
WASHINGTON – U.S. employers added 2.5 million jobs in May as businesses began to reopen following months of closures ordered at the outset of the coronavirus pandemic. The uptick in hiring dropped the unemployment rate to 13.3%, the Labor Department said Friday.
Many economists had predicted a loss of an additional eight million jobs in May and an unemployment rate of 19% or higher.
The unexpected job gain suggests that businesses have quickly been recalling workers as states have reopened their economies.
Other indicators show that the job market meltdown triggered by the coronavirus has bottomed out.
The number of people applying for unemployment benefits has declined for nine straight weeks. And the total number of people receiving such aid has essentially leveled off.
The overall job cuts have widened economic disparities that have disproportionately hurt minorities and lower-educated workers.
Though the unemployment rate for white Americans was 12.4% May, it was 17.6% for Hispanics and 16.8% for African-Americans, the department said
Even with the surprising gains in May, it may take months for all those who lost work in March and April to find jobs. Some economists forecast the rate could remain in double-digits through the November elections and into next year.
The increase in employment was across most industries, with the most notable exception being the government. The number of jobs in government dropped by 585,000 in May after a 963,000 drop in April. The decline in tax revenue in state and local governments is forcing them to shed workers.
Gordon Gray, of the American Action Network, a nonprofit, conservative issue advocacy group based in Washington, said the disparity between Friday’s numbers and expectations is largely due to the bottom of the pandemic-caused slowdown having occurred somewhat sooner than expected.
Gray noted that average hourly earnings fell by 29 cents, but still reflecting a substantial gain – 6.95 percent for the year. “Average hourly earnings for production and non-supervisory workers declined by 14 cents for a 6.93 percent gain over the year,” in an email. “These substantial increases continue to reflect the compositional effects of the substantial loss of lower-paid workers.”
The Conference Board, a think tank based in New York, said based on Friday’s figures, the number of jobs is likely to sharply grow further in the next 2-3 months as states continue to relax social distancing restrictions.
“The big question is how willing consumers will be to spend on consumption categories that pose a contagion risk,” the think tank said. “They will probably spend less on categories that both pose a high contagion risk and could more easily be avoided for a while, such as entertainment and flights. A full recovery in employment is unlikely to occur in the next 12 months.”