Job Report Shock: May Payrolls Soars By 2.5 Million, Unemployment Rate Drops, Crushing Bearish Expectations
“THESE NUMBERS ARE INCREDIBLE” Trump Booms
… the BLS shocked markets when it reported that, contrary to week after week of millions in initial jobless claims, and in line with the much more optimistic ADP report, not only did May payrolls not drop by the 7.5 million expected drop, but actually SOARED by 2.5 million, crushing expectations, and indicating that already in May when the country was under widespread lockdowns, jobs came soaring back.
Just as shocking is that the unemployment rate which was expected to surge to a record 19.1% in May from 14.7% in April, actually declined in May to 13.3% (although Black unemployment did rise modestly).
And in continuing the bizarro world of now completely meaningless data, the average hourly earnings dropped from last month’s revised 8.0% actually dropped to 6.7%, also mocking expectations of an increase to 8.5%.
How “political” was today’s report? We will leave it to readers to decide especially when moments after the report Trump, who knew the numbers yesterday, boomed on his twitter account that “THESE NUMBERS ARE INCREDIBLE”
THESE NUMBERS ARE INCREDIBLE! @MariaBartiromo
— Donald J. Trump (@realDonaldTrump) June 5, 2020
I am so stunned. I’ve never seen numbers like this and I’ve been doing this for 30 years! Steve M. @MariaBartiromo
— Donald J. Trump (@realDonaldTrump) June 5, 2020
Looking at a breakdown by industry
- Employment in leisure and hospitality increased by 1.2 million, following losses of 7.5 million in April and 743,000 in March. Over the month, employment in food services and drinking places rose by 1.4 million, accounting for about half of the gain in total nonfarm employment. May’s gain in food services and drinking places followed steep declines in April and March (-6.1 million combined). In contrast, employment in the accommodation industry fell in May (-148,000) and has declined by 1.1 million since February.
- Construction employment increased by 464,000 in May, gaining back almost half of April’s decline (-995,000). Much of the gain occurred in specialty trade contractors (+325,000), with growth about equally split between the residential and nonresidential components. Job gains also occurred in construction of buildings (+105,000), largely in residential building.
- Employment increased by 424,000 in education and health services in May, after a decrease of 2.6 million in April. Health care employment increased by 312,000 over the month, with gains in offices of dentists (+245,000), offices of other health practitioners (+73,000), and offices of physicians (+51,000). Elsewhere in health care, job losses continued in nursing and residential care facilities (-37,000) and hospitals (-27,000). Employment increased in the social assistance industry (+78,000), reflecting increases in child day care services (+44,000) and individual and family services (+29,000). Employment in private education rose by 33,000 over the month.
- Employment in retail trade rose by 368,000, after a loss of 2.3 million in April. Over-the-month job gains occurred in clothing and clothing accessories stores (+95,000), automobile dealers (+85,000), and general merchandise stores (+84,000). By contrast, job losses continued in electronics and appliance stores (-95,000) and in auto parts, accessories, and tire stores (-36,000).
- Employment increased in the other services industry in May (+272,000), following a decline of 1.3 million in April. About two-thirds of the May increase occurred in personal and laundry services (+182,000).
- Manufacturing employment rose by 225,000, with gains about evenly split between the durable and nondurable goods components. In April, manufacturing employment declined by 1.3 million, with about two-thirds of the loss occurring in the durable goods component. Within durable goods, employment gains in May were led by motor vehicles and parts (+28,000), fabricated metal products (+25,000), and machinery (+23,000). Within nondurable goods, job gains occurred in plastics and rubber products (+30,000) and food manufacturing (+25,000).
- Professional and business services added 127,000 jobs in May, after shedding 2.2 million jobs in April. Over the month, employment rose in services to buildings and dwellings (+68,000) and temporary help services (+39,000), while employment declined in management of companies and enterprises (-22,000).
- Financial activities added 33,000 jobs over the month, following a loss of 264,000 jobs in April. In May, employment gains occurred in real estate and rental and leasing (+24,000) and in credit intermediation and related activities (+7,000).
- Wholesale trade employment was up by 21,000 in May, largely reflecting job gains in its nondurable goods component (+13,000). In April, wholesale trade employment declined by 383,000.
- Employment continued to decline in government (-585,000), following a drop of 963,000 in April. Employment in local government was down by 487,000 in May. Local government education accounted for almost two-thirds of the decrease (-310,000), reflecting school closures. Employment also continued to decline in state government (-84,000), particularly in state education (-63,000).
- Employment in information fell by 38,000 in May, following a decline of 272,000 in April.
- Mining continued to lose jobs in May (-20,000), with most of the decline occurring in support activities for mining (-16,000). Mining employment has declined by 77,000 over the past 3 months.
- Transportation and warehousing jobs decreased in May (-19,000), after an April decline of 553,000. Air transportation lost 50,000 jobs over the month, following a loss of 79,000 jobs in April. In May, employment rose by 12,000 in couriers and messengers and 10,000 in transit and ground passenger transportation.
So does this fantastic jobs report mean the Fed has to hike soon?
(TLB) published this report from ZeroHedge and was edited for space by (TLB) editors.
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