Rewrite the script.
The US added 2.5 million jobs in May, marking an astonishing turnaround after April’s historic tragedy.
Markets had largely written May’s report off as a kind of sunk cost, and economists were expecting another grim read on the headline. And yet, somehow, the labor market bounced back in spectacular fashion.
The market was looking for another 7.5 million lost jobs over the survey period. That means this print is a remarkable beat, to put it mildly.
April’s 20.5 million headline was revised to 20.7 million lost jobs, and March’s report was revised sharply lower to -1.4 million.
And yet, those revisions hardly matter now. The unemployment rate was expected to hit nearly 20%, the highest since the Great Depression. Instead, it dropped from April to 13.3%.
Manufacturing payrolls rose 225,000 for the month, defying expectations for a 400,000 decline. The most optimistic estimate was for a loss of another 150,000 factory jobs.
Private payrolls rose 3.1 million against an estimated 6.75 million loss.
“These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain it”, the government said.
Employment in leisure and hospitality, construction, education and health services, and retail rose markedly for the month. Government payrolls continued to decline sharply, the BLS said.
This comes on the heels of an optically “good” ADP report for May, which perhaps presaged this rather anomalous beat.
It would be fair to say that this report does not match up with weekly jobless claims data. Thursday’s numbers, for example, were worse-than-expected, and millions of Americans have filed every week since the onset of the crisis.
Although continuing claims dropped two weeks ago, it’s somewhat difficult to reconcile all of this.
The bottom line (and I’ll have more on this as the day goes on) is that May’s jobs report was “supposed” to be the second worst top-tier economic data print in modern history, eclipsed only by the previous month’s astounding decline.
Instead, it offers the best argument yet for a “V-shaped” recovery. Or at least that’s the way it appears.