Total nonfarm payroll employment rose by 559,000 in May, a marked increase over the previous month’s job gains, according to the Bureau of Labor Statistics’ latest Employment Situation Report. The unemployment rate fell by 0.3 percentage points, down to 5.8%, and the number of unemployed persons fell by 496,000, down to 9.3 million. Both measures are far below their highs in April 2020, but remain elevated from pre-pandemic levels in February 2020—3.5% and 5.7 million, respectively.
Of the unemployed, the number of persons on temporary layoff fell by 291,000 to 1.8 million in May. This is down from 18 million in May, but 1.1 million higher than in February 2020. The number of permanent job losers fell by 295,000 to 3.2 million, 1.9 million higher than February 2020.
The number of persons jobless for less than five weeks fell by 391,000 to 2 million, while the number of long-term unemployed dropped by 431,000 to 3.8 million—still 2.6 million higher than in February 2020. The labor force participation rate was little changed at 61.6%, and the number of persons employed part time for economic reasons remained unchanged at 5.3 million.
According to the BLS supplemental household survey, 16.6% of employed persons teleworked because of the coronavirus pandemic in May, down from 18.3% in the previous month. Almost 8 million persons reported that they had been unable to work because their employer had closed or lost business during the pandemic, down from 9.4 million the previous month. Of those who reported they had been unable to work due to the pandemic, 9.3% said they had received some pay from their employer for hours not worked.
“Overall, the pace of job creation has appeared slower than what recent output growth would suggest, implying firms have been generating productivity gains with their workforce recently. Whether these productivity gains are permanent or transitory remains a question,” says Doug Duncan, chief economist at Fannie Mae. “Overall, we do not believe the pace of job creation shown in today’s report is significant enough to push the Fed to tighten monetary policy any earlier than previously signaled.”
Leisure and hospitality saw the strongest job gains in May, followed by public and private education and health care and social assistance. Employment in leisure and hospitality rose by 292,000 jobs, with nearly two-thirds of the increase in food services and drinking establishments (186,000).
Overall, construction employment fell by 20,000 jobs in May. According to the BLS, this reflects a large job loss in nonresidential specialty trade contractors (-17,000).
“The number of residential building construction workers increased 0.5% in May. Home building requires manual labor as a key input into the production process, so this is a step in the right direction. The number of residential construction workers has increased in 11 out of the last 12 months,” says First American deputy chief economist Odeta Kushi. “Construction employment is a non-substitutable input necessary to increase the pace of housing starts and increase the housing stock. In March, there were approximately two unemployed workers per job opening, and more job openings than prior to the pandemic. We need more construction workers.”
