WASHINGTON – The US economy added 559,000 additional jobs in May.
In normal times, this would amount to a blockbuster blast of hiring for a month, and the response would be a flurry of cheers.
These are not normal times. In the wake of a violent recession that crippled the economy and triggered millions of layoffs, the country still remains short of 7.6 million jobs, just before the outbreak of the viral pandemic in February 2020. So the government’s May jobs report on Friday came as a mild disappointment, coming after an even weaker month in April.
In a sense, the modest pace of hiring is astonishing: the economic rebound is accelerating, and the need for workers is increasing. COVID-19 is declining rapidly in the United States – new cases average more than 16,000, down from 250,000 in early January – as more Americans are vaccinated.
Yet economists note that the economy is in a strange place: it is recovering from a devastating crisis almost as fast as it succumbed to it. In fact, much of the speed of the rebound helps explain why job growth remains modest. Businesses are reopening as fast as consumers demand to shop, travel, eat out and participate in sports and other entertainment events. As they face that growing customer demand, they are struggling to find enough workers and supply as quickly as possible.
Over the next few months, economists expect labor shortages – and disruptions in supply chains that have contributed to this – to eventually clear the way for more robust job growth.
“The details of the report again showed a clear impact from labor supply constraints, and we expect strong job gains later this year,” Jan Hetzius, chief economist at Goldman Sachs, said in a research note.
Here are five excerpts from May’s jobs report:
ups and downs
Monthly job numbers are bouncing around as the economy navigates a bumpy transition in times of boom from the COVID-19 lockdown. During this transitional period, economists caution against trying to predict month-to-month hiring patterns.
“All of these employers gave the help-desired signal at the same time. It’s taking a few weeks for workers to get a job,” said Mark Zandi, chief economist at Moody’s Analytics.
In the past few months, job growth has increased from 233,000 in January to 536,000 in February to 785,000 in March, 278,000 in April and 559,000 in May. As recently as December, the economy had lost 306,000 jobs.
A step back, however, and the job market looks far less volatile: The three-month hiring average was 518,000 in March, 533,000 in April and 541,000 in May.
back to the office
Leslie Preston, a senior economist at TD Economics, called the decline in telecommuting “another sign that work life is slowly returning to normal.”
In another sign of encroachment on normality, the number of people who said they have decided not to look for work because of the pandemic dropped from 2.8 million in April last month to 2.5 million.
Payment has been made.
Average hourly earnings rose 0.5% in May, compared with a 0.7% increase in April. Last month’s wage increase was particularly impressive, given that 52% of the additional jobs came from the traditionally low-paying leisure and hospitality sector. This means that many of these workers are earning higher wages from employers desperate to attract or keep them. Many big chains, including Amazon, Walmart, Costco and Chipotle, have started raising salaries.
For non-supervisory workers in leisure and hospitality – including restaurant and hotel workers – hourly wages rose 1.2% from April last month and 8.8% from a year earlier.
Similarly, rank-and-file construction workers who benefited from the housing boom enjoyed a 4.4% wage increase in May compared to a year earlier. And amid a boom in online shopping and delivery, transportation and warehouse workers received an average of 3.5% hourly wage increases over the past 12 months.
Progress for the Unemployed
For months, employers have been recalling workers they had temporarily laid off after the pandemic hit them and forced them to lay off or return to their jobs. In May, the number of Americans on temporary layoffs fell by an additional 291,000 to 1.8 million – down 90% from a staggering 18 million in April 2020.
Even those who lost their old jobs made permanent progress last month: the number of such people dropped from 295,000 in May to 3.2 million. But it is still up 59% from 2 million in April 2020. About 3.8 million Americans — about 41% unemployed — have been out of work for six months or more.
Falling unemployment for people of color
The unemployment rate for black and Hispanic Americans fell sharply last month: 9.1% of black workers were unemployed in May, down from 9.7% in April. And 7.3% of Hispanics reported being out of work, compared to 7.9% in April. Like the overall US unemployment rate, these figures represent the lowest such jobless figures since March 2020.
Still, black and Hispanic unemployment is well above the unemployment rate for white Americans, which stood at 5.1% in May, up from 5.3% in April.
AP Economics writer Christopher Ragber contributed to this report.