Today, President Donald Trump will deliver remarks on today’s remarkable employment report and sign H.R. 7010 – PPP Flexibility Act of 2020 in the Rose Garden of the White House. The economic turnaround, the numbers indicate, has been much quicker and healthier than economists had predicted in May.
In a prediction that was widely carried by news outlets, economists had also predicted a historic loss of 7.5 million jobs in May alone. Today’s numbers shocked many as over 2.5 million were added to the economy.
Dow Jones averages rose on Friday on the excellent economic news with gains of over 800 points. Stocks are again nearing their historic highs hit just prior to the Covid-19 pandemic.
View the Council of Economic Advisors (CEA) blog post on today’s report here.
The Report Shows That Our Economy is Beginning to Rebound Earlier than Expected
- The U.S. economy added 2.5 million jobs in May and the unemployment rate fell from 14.7 percent to 13.3 percent.
- Employment increased significantly in leisure and hospitality (1.2 million), construction (464,000), education and health services (424,000), retail trade (368,000), and manufacturing (225,000).
- These job gains surprised forecasters, given many States were only beginning to reopen their economies during the reports’ reference periods(the week/pay period that includes May 12).
- The median of all private-sector forecasts predicted 7.5 million job losses in May and an unemployment rate of 19.2 percent.
- The economy beating expectations by 10 million jobs (larger than the population of Michigan!) and the unemployment rate falling instead of rising show that the transition back to strong economic growth began earlier than many expected.
Laid Off Workers Remain Attached to Their Jobs
- There were 15.3 million people on temporary layoff in May, in addition to an estimated 4.9 million people who had temporarily lost their jobs but were counted as employed but “not at work for other reasons.”
- Including all those who were potentially on temporary layoff, 78.2 percent of unemployed persons in May were on temporary layoff—well above the 13.3 percent average over the 12 months before this March.
- This provides reason to believe these temporarily laid off workers could return to their previous jobs as States continue reopening and economic activity picks up.
- These employment connections deteriorate the longer that States limit economic activity, so it is critical to continue focusing on reviving the health of America’s labor force.
- May’s labor market flows show that there was not an elevated level of workers dropping out of the labor force directly.
- Flows from employment to not in the labor force were 4.4 million from April to May, in line with the average over the 12 months before this March (4.7 million).
Job Gains Are Poised to Grow in June
- Another sign that job growth will continue is May’s jump in average weekly hours, as increasing hours can be a sign that employers need to hire more workers to meet demand.
- For all private sector employees, average weekly hours increased by 0.5 to 34.7 hours—the highest level since the series began in 2006.
- For production and non-supervisory employees, this measure increased by 0.6 to 34.1 hours—the highest level in 19 years.
- 73 percent of small businesses are now open—up from the pandemic-low of just 52 percent right before the April jobs report’s reference periods.
- Workplace visits are up roughly 40 percent from its pandemic-low.
–Dwight Widaman | Business wire services