Unemployment around the U.S. declined slightly in May, falling to 13.3% as the economy showed signs of recovering from the impact of nationwide shutdowns caused by the coronavirus.
Employers added 2.5 million jobs last month, the Labor Department said Friday, after April marked the biggest hit to the labor market since records began to be kept in 1948 and sent the unemployment rate skyrocketing to 14.7%.
The latest figures, which defied forecasts of millions of additional job losses, suggest the labor market has hit bottom and is now rallying. Economists predict that layoffs will ease as states reopen their economies following months of being locked down.
As encouraging as the May employment numbers are, the jobless rate is likely to remain elevated for a prolonged period of time. That’s because the jobs added in May were mostly people who had been furloughed or temporarily laid off, and employers brought many of those workers back last month. That trend is not certain to continue.
“This much better than expected report reinforces our view that April likely marked the trough in U.S. economic activity,” said Fitch ratings chief economist Brian Coulton in a note to investors. “The sharp pick-up in leisure and hospitality jobs and in construction and retail employment speaks to the impact of the easing in lockdowns in May and to the huge share of unemployed in April who were reported to be on ‘temporary’ layoff.”
The sheer scale of payroll losses in March and April as the coronavirus was spreading, which wiped out a decade’s worth of job growth, could still take years to reverse, many economists say.
A 13.3% jobless rate is higher than the peak of unemployment seen during the Great Recession, when it topped out around 10%. A broader measure of unemployment, which includes people who stopped looking for work and part-time workers who want full-time work, stood at 21.2% in May.
“The bounceback started earlier than most expected, but don’t get too excited about this one month of data,” Nick Bunker, economic research director for job-site Indeed, said in a research note. “We’ll have to see many months of job growth this strong to get the labor market back to a healthy place. And it’s far from clear we’ll see numbers like this consistently moving forward.”
