May Employment Surprises to the Upside

By Richard Branch, Chief Economist, Dodge Data & Analytics

BEDFORD, MA – June 5, 2020 – In a huge upside surprise the U.S. economy added 2.5 million jobs in the month of May – consensus estimates were looking at a potential decline in employment of between 4 to 8 million jobs. May’s net addition to employment follows declines of 1.4 million in March and 20.7 million in April. The unemployment rate fell from 14.7% to 13.3%. Private sector jobs increased by 3.1 million while government employment was down by 585,000.

From a construction standpoint, the sector added back 464,000 jobs following a decline of 995,000 in April.  Employment in building construction rose by 105,000, while heavy and civil engineering jobs increased by 33,500. Specialty trade contractors added 325,000 jobs.

Today’s release confirms that when looking back on this recession, May will have been the low point with the recovery phase beginning in June. As state and local governments continue to loosen rules on business activity, hiring will certainly pick back up and the economy will move forward.

However, this recovery will be a very long and slow process fraught will potential pitfalls. Even with today’s number, employment is down close to 20 million from its February level. The easy lifting will come first. With the massive negative numbers in April, there was bound to be an immediate jump in employment as people started returning to work. That jump has come sooner than expected, but growth in the second half of the year will nevertheless be slow-going. Even by year end, the unemployment rate will be stubbornly high – potentially still close to 9% - compared to the 3.5% rate before the COVID crisis began. May’s report should certainly be viewed with a sense of cautious optimism in these dark and difficult times.

 

 

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