May jobs report: US economy unexpectedly adds 2.5 million payrolls, unemployment rate falls to 13.3%

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The May jobs report showed an unexpected rise in non-farm payrolls across the economy and a drop in the unemployment rate from April, averting what economists expected would be a rise in the jobless rate to the highest level since the Great Depression amid the coronavirus pandemic.

The Labor Department released the May jobs report Friday at 8:30 a.m. ET. Here were the main results from the report, compared to Bloomberg consensus data:

  • Change in non-farm payrolls: +2.509 million vs. -7.5 million expected and -20.687 million in April

  • Unemployment rate: 13.3% vs. 19.0% expected and 14.7% in April

  • Average hourly earnings month on month: -1.0% vs. +1.0% expected and +4.7% in April

  • Average hourly earnings year on year: +6.7% vs. +8.5% expected and +8.0% in April

The Labor Department’s surveys captured the period including the 12th of the month, meaning the May report included the very early stages of reopening in some parts of the U.S. amid the coronavirus outbreak. But the rise in non-farm payrolls still exceeded all economist expectations, with no economists included in Bloomberg’s survey having predicted a rise in jobs during the month of May. Stocks rallied strongly following the report.

The May jobs report showed an unexpected rise in non-farm payrolls (David Foster/Yahoo Finance)
The May jobs report showed an unexpected rise in non-farm payrolls (David Foster/Yahoo Finance)

“Total nonfarm payroll employment increased by 2.5 million in May, reflecting a limited resumption of economic activity that had been curtailed due to the coronavirus pandemic and efforts to contain it,” the BLS said in its statement Friday.

The private services sector recovered 2.425 million payrolls in May after shedding 17.351 million in April. Leisure and hospitality – far and away the hardest-hit industry group in April, with more than 7.5 million jobs lost – saw the largest rebound, with 1.24 million positions added in May.

Education and health services industries added 424,000 payrolls in May after shedding 2.59 million in April. Retail trade, wholesale trade, financial activities, and professional and business services also added jobs for the month.

Within the services sector, only the transportation and warehousing, utilities, and information industries extended job losses from April.

The goods-producing sector also added jobs, with these rising 669,000 after declining by 2.373 million in April. Manufacturing payrolls rose by 225,000, recovering some of the 1.324 million payrolls lost during the prior month.

Government payrolls, however, extended declines, with these falling by 585,000 after a drop of 963,000 in April.

The broad-based gains in payroll employment “indicates that the process of rehiring began sooner than the jobless claims figures suggested,” said Michael Pearce, senior U.S. economist for Capital Economics. “With more states moving to loosen their lockdowns in the coming weeks, particularly in the populous Northeast, employment looks set to continue rebounding in June and beyond, although we still think it will be a long time before the labor market is anywhere near back to its pre-virus state.”