New hiring in May was concentrated in service industries, primarily in health, leisure and hospitality
DIRE HEADLINES had already been prepared before the release of America’s May jobs report on June 5th. Most analysts expected payroll employment to have fallen last month by several million, on the heels of record declines in March and April, and the unemployment rate to have jumped to nearly 20%. Instead, the Bureau of Labour Statistics reported a sharp increase in employment, of 2.5m, and a drop in the jobless rate from 14.7%, a post-Depression record, to 13.3%.
Those bleak expectations had been set by a flow of dreadful economic news. Americans continue to file new claims for unemployment benefits by the million. Indices of economic activity showed that production kept declining across the economy in May, although at a far slower pace than in April. Yet some high-frequency indicators—such as restaurant bookings and measures of personal travel—had indicated signs of revival.
But the details of the report, though encouraging, do not suggest that a rapid return to normality is imminent. New hiring was concentrated in service industries, primarily in health, leisure and hospitality. But the number of new jobs in May amounted to just a fraction of the total lost since February; the leisure industry added about 1.2m last month, but shed more than 8m in March and April.
Labour-market data are very likely to keep improving over the summer, as state and local governments continue to ease lockdowns. The critical question for the American economy, however, is how many job losses and firm closures will prove permanent. Joblessness will probably remain well above normal levels, and policy support for the unemployed will continue to be justified.
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