The U.S Bureau of Labor Statistics on Friday said that the unemployment rate declined to 13.3% in May. This decrease in unemployment rate beats forecasts, where-in an increase of unemployment to almost 20% was projected.
According to the report from the Bureau of Labour Statistic seen by Investogist, employers in the U.S added 2.5 million jobs in May defying economists’ prediction of 7.5 million job loss.
The U.S witnessed the highest unemployment rate since the Great Depression at 14.7% with 20.5 million job losses in April as the country battles coronavirus pandemic.
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According to the Bureau of Labor Statistics, “these improvements in the labor market reflected 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.”
“In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade. By contrast, employment in government continued to decline sharply.”
President Donald Trump cerebrated the great job numbers in series of tweets as he always does. “Greatest Top Five Monthly Jobs Gains in HISTORY. We are #1!” he wrote in one tweet.
Really Big Jobs Report. Great going President Trump (kidding but true)!
— Donald J. Trump (@realDonaldTrump) June 5, 2020
U.S. Secretary of Labor Eugene Scalia in a statement about the May 2020 Employment Situation report said, “today’s report shows much higher job creation and lower unemployment than expected, reflecting that the re-opening of the economy in May was earlier, and more robust, than projected.”
“Millions of Americans are still out of work, and the Department remains focused on bringing Americans safely back to work and helping States deliver unemployment benefits to those who need them. However, it appears the worst of the coronavirus’s impact on the nation’s job markets is behind us.”
Fig 1: U.S Unemployment Rate trend 1948 – May 2020
The report is “rather startling,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics. “The biggest payroll surprise in history, by a gigantic margin, likely is due to a wave of hidden rehiring.”
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According to the bureau, employment rose across the hospitality and construction industries as states began to reopen across the country throughout May. Education and health services, as well as retail trade and leisure also saw significant hiring increases.
Before Friday, many had expected the unemployment numbers to be worse than those during the Great Depression.
Scott Anderson, chief economist at Bank of the West, said. “This May number is going to be bad,” he said. “We’re looking at an unemployment rate approaching Great Depression levels. We’re expecting 10 million jobs were lost…We think the unemployment rate will hit 20.5%. When you look at the claims reports, it’s pretty horrific. We’re still looking at elevated unemployment claims.”
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However, despite the surprising job numbers, some experts are warning that the economy is still fragile. Josh Lipsky, director of programmes and policy at the Atlantic Council’s Global Business and Economic Program, said in a statement to The Independent, “Today’s jobs report is much-needed good news for the American labor force.”
“It shows that hiring is picking up steam at a rapid rate. But it would be a dangerous mistake to think we are out of the woods.”
Written by;
Ifunanya Ikueze
