Economists had feared a jump as high as 20 percent…
(Liberty Headlines) The U.S. unemployment rate fell to 13.3% in May from 14.7% in April, and 2.5 million jobs were added — a surprisingly positive reading in the midst of a recession that has paralyzed the economy in the wake of the viral pandemic — as states loosened their coronavirus lockdowns and businesses began recalling workers.
The May job gain, which confounded economists’ expectations of another round of severe losses, suggests that thousands of stores, restaurants, gyms and other companies reopened and rehired more quickly than many analysts had forecast.
For hiring to continue at a solid pace, businesses will probably need to see signs that consumers are starting to resume their pre-outbreak habits of shopping and dining out.
Other evidence has also shown that the job-market meltdown triggered by the coronavirus has bottomed out. The number of people applying for unemployment benefits has declined for nine straight weeks. And the total number of Americans receiving such aid has essentially leveled off.
The overall job cuts have widened economic disparities: While the unemployment rate for white Americans was 12.4% May, it was 17.6% for Hispanics and 16.8% for African-Americans.
For weeks, economists had warned that unemployment in May could hit 20% or more. Apparently their predictive capabilities match those who forecast many more deaths from coronavirus than actually occurred.
A few businesses are reporting signs of progress even in hard-hit industries. American Airlines, for example, said this week that it will fly 55% of its U.S. routes in July, up from just 20% in May.
And the Cheesecake Factory said one-quarter of its nearly 300 restaurants have reopened, though with limited capacity. Sales are at nearly 75% of the levels reached a year ago, the company said.
Erica Groshen, a labor economist at Cornell University and a former commissioner of the Labor Department’s Bureau of Labor Statistics, said hiring could ramp up relatively quickly in the coming months and reduce unemployment to low double-digits by year’s end.
“Then my inclination is that it will be a long, slow slog,” she said.
Until most Americans are confident they can shop, travel, eat out and fully return to their other spending habits without fear of contracting the virus, the economy is likely to remain sluggish.
Adapted from reporting by Associated Press.