All Posts Tagged: employment
The May Employment Report released this morning from the Bureau of Labor Statistics captured more of the economic reopening than we expected, allowing for a surprising 2.51 million gain in nonfarm payrolls and a drop in the unemployment rate to 13.3% from 14.7% in April.
We had forecast an unemployment rate of 20.5% for May, and today’s far lower reading suggests a faster road to recovery for the U.S. economy.
The U.S. unemployment rate likely peaked in April at 14.7% and we expect further declines in the U.S. unemployment rate in the months ahead.
We are unlikely to see an official print of the U.S. unemployment rate above Great Depression levels unless a resurgence of the virus requires another period of widespread business shutdowns to contain the outbreaks. Still, the U.S. labor market isn’t exactly healthy. The BLS noted that many people were likely misclassified as “employed but not at work” and should have been classified as unemployed.
If those misclassified folks were included, it would put the true U.S. unemployment rate at a far higher 16.4% down from April’s 19.5% level. If one includes marginally attached workers and those working part time for economic reasons, the unemployment rate would be 21.2%.
As of May, almost 21 million American’s remain officially unemployed about 6 million more than during the Great Recession peak.
Millions more have exited the labor force all together. Since January, the civilian labor force has shrunk by 6.4 million people and contracted 2.8% over the past 12 months.
The 3.1 million increase in private sector jobs in May was clearly driven by businesses that had been mostly shuttered in April. More than two-thirds of May’s nonfarm job gains came from just two sectors: leisure and hospitality (+1.24 million) and construction (+464 thousand).
Health care, retail trade, and manufacturing also added hundreds of thousands of jobs as furloughed workers got called back to work. Job gains were meager in financial services in comparison (+33k), while mining, information services, and government all continued to shed net jobs.
Government payrolls slumped 585,000 as census hiring slowed and state and local governments began to address gaping budget gaps. Moreover, it is important to keep these May job gains in perspective. From year ago levels, the job losses remain monstrous – 17.7 million net nonfarm payroll jobs lost; 6.7 million in leisure and hospitality and 2.8 million in trade, transportation, and utilities alone.
So where do we go from here? The quick rebound in employment and sizable drop in May unemployment is encouraging. This should ease a bit of the drop in consumer spending in the second quarter, and sets the U.S. up for a better growth rebound in the third quarter.
We are boosting our real GDP growth forecast to 15.2% annualized in the third quarter as consumer spending is forecast to increase at a 23 percent annualized rate on pent-up demand.
GDP growth is expected to cool in the fourth quarter, but growth gains should be strong enough to push the U.S. unemployment rate below 10 percent before the end of the year. Much could still go wrong. A resurgence of the virus or a lack for further government support for state and local governments are still big downside economic risks in my opinion.
To find out more on how today’s job’s report impacts our economic and interest rate forecasts, check out this week’s U.S. Outlook Report.
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The coronavirus itself is a serious threat to both U.S. and global economic expansion.
It is both a supply and demand shock to global growth as producers face supply-chain disruptions and service and retail businesses see a sharp drop in consumer demand as more and more people self-isolate to protect themselves from the rapidly spreading infection. But the virus and the global economic shock it is creating are also starting to touch off financial market contagion and volatility, the likes of which we haven’t seen since the global financial crisis of 2007 and 2008.Read More ›
The January payroll report was a solid report across most metrics.
The headline nonfarm payroll gain of 225k jobs last month handily beat analysts’ forecasts looking for a gain of 165k jobs in January. U.S. nonfarm payroll growth was 1.8% on an annualized basis last month.Read More ›
Nonfarm payroll growth accelerated to 266k jobs last month easily surpassing the consensus forecast looking for a 180k job gain.Read More ›
The U.S. labor market is slowing, just not as quickly as we all thought before the release of the October payrolls report. Despite the substantial headwinds of the GM strike and escalation of the trade war in September, U.S. nonfarm employment managed to increase a better than expected 128k jobs last month.Read More ›