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Economy add 2.5 million jobs as businesses reopen

Economy add 2.5 million jobs as businesses reopen


Economy add 2.5 million jobs as businesses reopen

Paul Davidson
USA TODAYPublished 11:17 AM EDT Jun 5, 2020The economy unexpectedly gained 2.5 million jobs in May after record losses the prior month as states began allowing businesses shuttered by the coronavirus to reopen and many Americans returned to work.The unemployment rate fell to 13.3% from April’s 14.7%, which was the highest since the Great Depression.Economists surveyed by Bloomberg had reckoned that eight million jobs were lshedlast month following 20.7 million losses in April.”The biggest payroll surprise in history, by a gigantic margin, likely is due to a wave of hidden rehiring,” says Ian Shepherdson, chief economist of Pantheon Macroeconomics.Stocks jumped on the news. In early trading, the Dow Jones industrial average rallied 700 points and Standard & Poor’s 500 climbed 2%.President Trump is scheduled to speak about the stunning job gains at 10 a.m. ET.May’s shocking increase in payrolls upended virtually every economist’s predictions for another month of massive losses, though less severe than April’s. Although states have started letting businesses gradually reopen in phases, the Labor Department’s survey was conducted in mid-May, relatively early in that process.And Labor on Thursday said about 20.1 million Americans were receiving unemployment checks during the week ending May 16. To be sure, not all of those getting benefits are unemployed. Some were on furlough or temporary layoff while others endured reduced hours.A hint that the labor market could have turned around so swiftly was that about 90% of those who were unemployed in April said they were on temporary layoff. In May, the number of people on temporary layoff fell by 2.7 million to 15.3 million. Meanwhile, the ranks of those who permanently lost jobs increased by 295,000 to 2.3 million.Another inkling was that payroll processor ADP reported 2.8 million private-sector job losses in May, below the nine million expected. But that’s still very different than a similar-size job gain.In May, nearly after industry partly reversed the prior month’s huge losses. Leisure and hospitality, the sector hardest hit by the pandemic, gained 1.2 million jobs following 7.5 million losses the prior month. Retail added 368,000 following 2.3 million losses.Construction added 464,000 jobs, recovering about half of the positions shed in April. Manufacturing added 225,000 jobs following 1.3 million losses. Healthcare added 312,000 as many physician and dental offices reopened.And professional and business services added 127,000 jobs after 2.2 million losses.Although the big jobs rebound began a month earlier than expected, the labor market and economy still face a long and grueling road to recovery. The economy still shed 22.1 million jobs in March and April after Labor revised up the losses by 642,000 Friday, wiping out nearly all of the gains since the Great Recession of 2007-09.Oxford Economics expects a strong recovery the second half of the year as businesses continue to reopen but it reckons the economy will recoup only about 60% of the jobs lost by year’s end, leaving unemployment close to 10%. “It’ll be a long time before the labor market is anywhere near back to its pre-virus state,” says economist Michael Pierce of Capital Economics.And Leslie Prestom of TD economics says the rising share of permanent job losses in May “implies a longer period of recovery.”Many Americans lost jobs permanently and are struggling despite trillions of dollars in government aid.Molly Lynch, 32, of Las Vegas, lost her job as a regional coordinator for Sen. Bernie Sanders’ presidential campaign in late February because of the coronavirus. Shortly after, the pandemic wiped out her boyfriend Augustus Fink’s warehouse job.Fink filed for unemployment benefits a couple of months ago but still hasn’t received any payments. He has applied for hundreds of jobs to no avail.The couple hasn’t been able to pay rent or utility bills for several months and relies on food stamps for groceries. Lynch’s mother, who lives with the couple, used her Social Security benefits to pay her daughter’s car insurance. Fink’s $1,200 government stimulus check is helping cover their cellphone bills.“It’s pretty terrifying,” Lynch says, noting the couple have a four-year-old daughter and another child on the way. “I don’t want (her daughter) to be scared. This has never happened in my lifetime.”Now that Las Vegas beauty salons have reopened, Lynch wants to get a job as a cosmetologist but she can’t afford to renew her license. She’s hoping to land a receptionist job at a salon so she can pay the renewal fee and become a cosmetologist, allowing the couple to start digging out of their financial hole. Labor force participation risesIn May, the share of Americans working or looking for jobs — which together make up the labor force – rose from 60.2%, lowest since 1973, to a still depressed 60.8%. That’s good news because it means unemployment fell even as more people on the sidelines began looking for work.Many people who lost jobs didn’t look for work because of fears of catching the virus while job hunting, caring for sick relatives or watching kids who were home now that schools are closed. Also, with much of the economy shuttered, few were jobs available and many workers expected to be recalled by their employers as the pandemic eased.Broader jobless measure dropsWhile the unemployment rate fell, a broader measure of joblessness also edge down. That gauge – which includes Americans working part-time even though they want full-time jobs, discouraged workers who have stopped looking and the unemployed – declined from 22.8% to 21.2%.

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