The U.S. economy added 559,000 jobs in May, below economists’ expectations of as many as 1 million, but double April’s lackluster numbers, seasonally adjusted government data released Friday showed. The leisure and hospitality industry gained 292,000 jobs, accounting for most of the increase, as people leave home and spend money on outings. Nearly every sector posted gains, pushing the unemployment rate to its lowest level since the start of the pandemic, down to 5.8% from 6.1% in April. “While the rebound doesn’t send job gains over 1 million, it is a signal that the April slowdown was more of a blip than the start of a slowdown,” wrote Daniel Zhao, senior economist at Glassdoor, in a commentary. “The recovery has yet to show signs it’s ready to charge forward with a full head of steam, but is still lightly tapping the accelerator.” The number of people on payrolls is now 7.6 million below where it was in February 2020, before the pandemic caused the economy to shed 22.4 million jobs in a matter of months. The jobs market since has settled into gradual improvement after an initial burst of hiring last summer, adding at least 200,000 jobs every month in 2021. But there’s a long way to go—at the current pace, using the average of the last three months, the U.S. wouldn’t return to pre-pandemic levels of employment until July 2022. If the number of jobs added in May sounds like a lot, that’s because it is, historically. But expectations for labor market growth have skyrocketed thanks to similar bursts elsewhere in the economy. Gross domestic product surged 6.4% in the first quarter on the back of stimulus-fueled consumer spending, and prices have shot up as businesses strain to keep pace with people eager to spend the money they’ve saved during the pandemic. That led to predictions that the labor market would soon show the same strength by adding 1 million jobs per month throughout the spring and summer. That hasn’t happened yet, though, as a shortage of supplies and workers has limited how much businesses have been able to hire. The labor force—which includes people who are employed or looking for work—dropped slightly in April, according to data from the Bureau of Labor Statistics. Issues finding childcare, continued anxiety about the pandemic, and the federal unemployment insurance supplement all could be keeping workers at home. But these factors should ease in the coming months, Lydia Boussour, lead U.S. economist at Oxford Economics, wrote in a commentary, predicting monthly gains of 1 million jobs—or more—throughout the summer. In another positive sign for the labor market, we’ve seen businesses hanging on to the workers they have, with initial claims for unemployment insurance cut nearly in half in the last eight weeks. One other factor complicating the jobs-recovery picture is that the most widely used set of payroll numbers is what’s called “seasonally adjusted,” meaning the figures have been altered to account for the economy’s natural, seasonal cycles. The raw—not seasonally adjusted—data shows that the U.S. added 2.1 million people to payrolls the last two months, and some economists are unsure whether the formulas used to adjust the data for seasonal factors can accurately capture what’s happening in a pandemic-altered economy that has defied traditional cycles.
