US labour market unexpectedly improves after record losses

The jobless rate falls to 13.3% last month from 14.7% in April; President Trump celebrated the employment report and predicted the battered economy will recover by 2021

The US economy unexpectedly added jobs in May after suffering record losses in the prior month, offering the clearest signal yet that the downturn triggered by the COVID-19 pandemic was probably over, though the road to recovery could be long.

The Labor Department’s closely watched employment report on Friday also showed the jobless rate falling to 13.3% last month from 14.7% in April, a post World War Two high. It followed on the heels of surveys showing consumer confidence, manufacturing and services industries stabilizing. Economic conditions have significantly improved as businesses reopened after shuttering in mid-March to slow the spread of COVID-19.

Nonfarm payrolls rose by 2.5 million jobs last month after a record plunge of 20.7 million in April. Economists polled by Reuters had forecast payrolls falling by 8 million jobs in May and the unemployment rate jumping to 19.8%.

Despite last month’s surprise increase, payrolls are nearly 20 million below their pre-COVID-19 level. The unemployment rate has risen 9.8 percentage points and the number of unemployed is up 15.2 million since February.

The Labor Department’s Bureau of Labor Statistics, which compiles the employment report, also noted a continuing problem with misclassification by respondents, which lowered the unemployment rate last month. A large number of people classified themselves as being “employed on temporary layoff” instead of “unemployed on temporary layoff.”