Total non-farm payroll employment increased by 2.5 million in May with the unemployment rate declining to 13.3%, the U.S. Bureau of Labor Statistics (BLS) reported Friday. Last month’s improvements in the labor market reflects the limited resumption of activity in states that had been diminished in March and April due to the COVID-19 pandemic and stay-at-home orders.
“Today’s report shows much higher job creation and lower unemployment than expected, reflecting that the reopening of the economy in May was earlier, and more robust, than projected,” said Secretary of Labor Eugene Scalia. “Millions of Americans are still out of work, and the department remains focused on bringing Americans safely back to work and helping states deliver unemployment benefits to those who need them. However, it appears the worst of the coronavirus’s impact on the nation’s job markets is behind us.”
Sharp gains were seen in leisure and hospitality, construction, education and health services, and retail trade in May. However, employment in government continued to sharply decline. The unemployment rate decreased by 1.4 percentage points to 13.3%, and the number of unemployed decreased by 2.1 million to 21 million. According to the BLS, the unemployment rate and the number of unemployed people are up by 9.8 percentage points and 15.2 million, respectively, since February, which reflects the impact of COVID-19.
The labor force rate participation rate increased slightly, 0.6 percentage point, last month to 60.8%, following a 2.5 percentage point decrease in April. Total employment, measured by the household survey, increased by 3.8 million in May to 137.2 million, following a steep drop in April.
Last month, employment in leisure and hospitality jumped by 1.2 million, after a loss of 7.5 million in April and 743,000 in March. Following steep declines in April and March, employment in food services and drinking establishments also rose by 1.4 million, accounting for about half of the gain in total non-farm employment.
Construction employment rose by 464,000 in May, gaining back almost half of April’s decline of 995,000. According to the BLS, much of the increase occurred in specialty trade contractors, with growth about equally split between the residential and nonresidential components. Job increases also were seen in construction of buildings, largely in residential building.
“The housing market was directly hit in April’s jobs report, as residential construction jobs fell to their lowest level since 2016, but have already started to turn a corner in May’s report. Jobs in residential construction increased by 9.2% in May, only 3.6% below May 2019,” said First American deputy chief economist Odeta Kushi.
Kushi added that the housing market is helping the economy recover from the recession—a role the industry has traditionally played in previous economic recoveries. “Home builder confidence increased in May after April’s record-breaking decline, as builders responded to low mortgage rates and a continued rise in purchase applications, signs home buyers are back in the market to buy.”
However, construction employment is still 596,000 below the latest peak in February. The Associated General Contractors of America cautions that future job losses are likely as the nation sees temporary federal support programs end, state and local officials deal with tighter budgets, and private-sector demand declines later this year.
“The huge pickup in construction employment in May is good news and probably reflects the industry’s widespread receipt of Paycheck Protection Program loans and the loosening of restrictions on business activity in some states,” said Ken Simonson, the association’s chief economist. “Nevertheless, the industry remains far short of full employment, and more layoffs may be imminent.”
