What to Expect from the May Jobs Report: Live Updates
What to Expect from the May Jobs Report: Live Updates
The job market unexpectedly reversed its free fall in May as employers brought back millions of workers after pandemic-induced layoffs and the unemployment rate declined.
Tens of millions remain out of work, and the unemployment rate, which fell to 13.3 percent from 14.7 percent in April, remains higher than in any previous postwar recession.
But employers added 2.5 million jobs in May, the Labor Department said Friday, defying economists’ expectations of further losses and offering hope that the rebound from the pandemic-induced economic crisis could be faster than forecast.
Still, job openings remain far below normal, and the trillions of dollars in government assistance that have helped keep the economy on life support may be nearing their end.
The report noted that “employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade,” even as jobs in the government continued their decline.
“What this is telling us is that at least part of the pain in April was due to people being laid off or furloughed who still had very strong connections to their employers,” Ernie Tedeschi, an economist at Evercore ISI in Washington, said. “As good and surprising as this report was, this may just be the low-hanging fruit. These may have been the easiest workers to bring back.”
The rehiring bonanza at restaurants helped to lift payrolls.
Restaurants and bars, health care employers and construction were among the sectors that drove the May job market improvement, based on the Labor Department’s report.
About 1.4 million people gained or took back their restaurant jobs, even as hotels continued to shed workers. About 460,000 were hired or rehired in construction, 370,000 in retail, and 390,000 in health care and social assistance. That latter boost came heavily from dentist’s offices, which took back some 245,000 workers.
The data tells the story of an employment rebound as the state and local economies began to reopen and Paycheck Protection Program checks went out, spurring rehiring and bringing workers back onto payrolls.
“The economy is still being very much buffered by stimulus,” said Michelle Meyer, head of U.S. economics at Bank of America. “When that starts to wane, we will learn a lot more about the underlying health of the recovery.”
Ms. Meyer noted that more than half of the job gains in May — 1.4 million — were in restaurants and bars, many of which probably received assistance under the government’s Paycheck Protection Program. Friday’s report suggests that the program, along with other elements of the government’s response, helped offset at least some of the economic damage.
The jobs report could deflate congressional efforts to enact another round of stimulus.
The unexpected upswing in the monthly jobs report on Friday threw into doubt the prospects of another coronavirus stimulus bill, threatening to further temper Republicans’ willingness to provide additional relief.
“Goodbye phase 4,” a Republican official wrote in a text message on Friday morning after the numbers were released, encapsulating a sense among lawmakers and aides that the figures would sap what little enthusiasm there was for more.
Others conceded privately that some relief package would likely still materialize, but with a substantially lower price tag and a narrower focus on modifying existing programs, rather than creating new ones.
Republicans had already thrown cold water on the idea of another stimulus package on top of the nearly $2.8 trillion already enacted, warning of soaring deficits and arguing that they wanted to see how the economy responded before doling out more money.
A number of new programs and economic lifelines expire later this summer, giving Congress a hard deadline to decide whether to extend the benefits or modify them to adjust for the country’s economic state. Those include an enhanced package of unemployment benefits that lapse at the end of July, which Republicans had already said they opposed extending.
House Democrats last month approved a $3 trillion relief package that would send aid to struggling state and local governments and another round of direct $1,200 payments to taxpayers, which Republicans rejected outright. Instead, some Senate Republicans are coalescing around toughening liability protections for health care workers and businesses that are beginning to reopen.
Democrats, however, argued that additional relief and legislation was still needed, given that the economy was nowhere near where it was before the pandemic.
Unemployment for black workers continued to rise.
Unemployment for Hispanic workers and white workers dropped sharply in May, while the jobless rate for black adults remained high.
Joblessness for white adults fell to 12.4 percent from 14.2 percent the prior month, and Hispanic worker unemployment declined to 17.6 percent from 18.9 percent. For black workers, however, joblessness was up slightly to 16.8 percent, and unemployment for Asians also increased, to 15 percent from 14.5 percent.
Construction and leisure and hospitality, sectors where Hispanic workers are heavily represented, rebounded sharply in May. Though it is too soon to tell with just one month of data, it could also reflect the beginning of a common recession pattern: job losses for black workers often continue even as the tide turns and white workers in particular begin to return to work.
Stocks on Wall Street shot higher on Friday, lifting the S&P 500 to within 7 percent of a new record, after the U.S. government reported a surprising pickup in hiring in May.
The S&P 500 rose more than 2 percent in early trading, and shares in Europe were 1 percent to 2 percent higher.
Futures were already rising before the government reported that employers added 2.5 million jobs in May. The consensus expectation from economists forecast that another 8 million jobs had been lost during the month.
“These much better than expected results suggest that the U.S. economy may be more resilient than many investors and analysts feared,” wrote John Stoltzfus, chief investment strategist, at Oppenheimer Asset Management.
The unexpected round of hiring sent stock market futures sharply higher in premarket trading, along with prices for crude oil and yields on U.S. Treasury bonds, suggesting the jobs numbers delivered an unexpected jolt of economic optimism to investors.
Energy, financial and industrial stocks led the day’s gains. Airlines — which had been battered by the Covid-19 crisis — soared, with United Airlines and Delta Air Lines both up more than 10 percent. American Airlines was up more than 25 percent, making it the best performing stock in the early trading of the S&P 500.
Financial markets have been on an upward trajectory for weeks as investors have responded to signs around the world that businesses were slowly but steadily returning to normal and policymakers pumped money into the economy and financial markets.
Since March 23, when the market bottomed after the Federal Reserve signaled its willingness to pump unlimited amounts of liquidity into financial markets to stabilize key bond markets that were then malfunctioning, the stock market has risen more than 40 percent.
Oil prices climb as OPEC is seen extending production cuts for another month.
Oil prices rose on Friday on expectations that the Organization of the Petroleum Exporting Countries, Russia and other producers will agree on Saturday to extend their production cuts by an additional month through July. These countries originally agreed on April 12 to trim production by a combined 9.7 million barrels a day or about 10 percent of global supplies in normal times. Production was supposed to begin rising gradually after June.
The producers are expected to meet by videoconference Saturday to agree on the extension and other matters, analysts said. OPEC has not yet confirmed that the meeting will occur.
Analysts say that extending the cuts could put further upward lift on oil prices, which have already risen sharply from their April plunge. On Friday, Brent crude, the international benchmark, was up about 5 percent to nearly $42 a barrel while West Texas Intermediate, the key American crude, was up about 4 percent.
Trump cheers jobs report surprise.
President Trump exulted in the surprisingly positive monthly jobs report released on Friday morning, taking to Twitter to claim credit for the improvement and attack his presumptive Democratic opponent on the economy.
The report showed the economy added 2.5 million jobs in May and the unemployment rate fell to 13.3 percent, signs that the labor market has begun to rebound from its lows of the coronavirus recession.
Mr. Trump claimed credit: “Really Big Jobs Report. Great going President Trump (kidding but true)!” he wrote on Twitter.
He announced a 10 a.m. news conference to discuss the numbers, then tweeted the comments of several television commentators who expressed surprise and delight at the jobs report. He later took a shot at his Democratic opponent, former Vice President Joseph R. Biden Jr.
“Oh no, the Dems are worried again,” Mr. Trump wrote. “The only one that can kill this comeback is Sleepy Joe Biden!”
‘Made in America’ since 1818, Brooks Brothers may need a new calling card.
In late March, Brooks Brothers was showered with praise after announcing it would use its three clothing factories in the United States to make personal protective equipment to help fight the coronavirus.
Now those factories may become casualties of the coronavirus, and the future of Brooks Brothers — not to mention its identity as the ultimate “Made in America” brand, one that has dressed presidents and former presidents dating to James Madison — is uncertain.
Brooks Brothers plans to lay off nearly 700 employees this summer at the factories, in Massachusetts, New York and North Carolina. The company is also trying to find buyers for the factories by mid-July, and expects to close them if it can’t.
In an interview, Claudio Del Vecchio, the 63-year-old Italian industrialist who bought Brooks Brothers in 2001 and was responsible for acquiring the factory in Massachusetts, spoke for the first time about the decision to divest from the vertical made-in-America supply chain.
“I feel very bad about this,” Mr. Del Vecchio said. But he added, “The factories never made money for us, and at this moment all resources need to be maintained and saved to make sure we can come out on the other side of the crisis.”
Catch up: Here’s what else is happening.
Gap, one of the biggest U.S. retailers with its namesake, Old Navy and Banana Republic chains, said on Thursday that net sales in the first quarter plummeted 43 percent to $2.1 billion and that it posted a net loss of $932 million. The company, which has nearly 2,800 stores in North America, said that it had reopened more than 1,500 locations and expected the “vast majority” of stores to be open by the end of June.
Slack, the business communication platform, said in a regulatory filing that its first-quarter revenue rose 50 percent to $201.7 million and a small loss compared to the same period last year. But the results disappointed investors, who expected greater growth during the pandemic, and its shares plunged.
Reporting was contributed by Conor Dougherty, Peter Eavis, Ben Casselman, Anupreeta Das, Peter Eavis, Vanessa Friedman, Mohammed Hadi, Sapna Maheshwari, Gregory Schmidt, Carlos Tejada and Kevin Granville.