State of the Labor Market

May 2020 Jobs Report: A Surprising Bounceback, but May Not Endure

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The US economy gained 2.5 million jobs last month, and the unemployment rate is at 13.3%, down from 14.7% in April.

The bounceback started earlier than most expected, but don’t get too excited about this one month of data. Job growth rising by 2.5 million and the unemployment rate dropping by over a percentage point are positive developments, but it’s not clear how enduring this will be. Furthermore, the labor market is still in a terrible spot with employment only 87% of where it was before the coronavirus crisis began.

Looking at the job growth data by industry, the rise in employment seems to be driven by the partial reopening of the economy after lockdown. Sectors hit hardest by the coronavirus are the ones seeing the largest bounceback in employment. Leisure and hospitality alone was responsible for about half of the increase in jobs. Food services and drinking places employment grew by 22%. But employment in these industries are still far below pre-virus levels.

Millions of jobs in one month is clearly a good start, but it’s far from enough. We’ll have to see many months of job growth this strong to get the labor market back to a healthy place. And it’s far from clear we’ll see numbers like this consistently moving forward.

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