The U.S. added 2.5 million jobs in May, a surprising bounceback after a March and April that saw 22.1 million total jobs lost and the highest unemployment rate recorded in decades. Experts said the return of restaurant and bar jobs accounted for a large portion of those gains, with construction and retail sectors also seeing boosts. The hotel industry, however, continued to struggle.
The unemployment rate fell last month to 13.3 percent as states reopened their economies, with retailers unlocking their doors after coronavirus stay-at-home orders shuttered nonessential businesses.
“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 Labor Department said.
Hiring at restaurants and bars, which have been reopening across the country, accounted for about half the gains in non-farm employment, according to the government, with construction and retail sectors also defying economists expectations with their improvement.
“The economic data in May has thus far come in better than expected,” said chief economist Mike Fratantoni of the Mortgage Bankers Association. “The housing market is helping to lead this rebound. We have highlighted the sustained seven-week increase in purchase applications, including two consecutive year-over-year gains.”
The positive trend comes at a time when many businesses — preparing to reopen or having just welcomed customers back — had to close because of the nationwide protests, and sporadic violence and looting, over the May 25 death of George Floyd at the hands of Minneapolis police.
After losing 8.2 million jobs during March and April, the leisure and hospitality industry rehired 1.2 million people in May, with restaurants and bars adding 1.4 million jobs. Hotels continue to be a sore spot, with employment in the accommodation sector falling in May; it has declined by 1.1 million since February. Hotels have been decimated by the coronavirus, many have been forced to close, and are behind on their loans and at risk of default.
Construction employment gained back almost half of April’s decline, according to the Labor Department. A majority of that growth — 325,000 new jobs — occurred in specialty trade contractors split evenly between the residential and commercial sectors; while construction job gains — 105,000 — were largely in residential buildings.
Fratantoni said this indicates “that homebuilding is on the mend, which should help further boost a broader economic recovery.”
Employment in retail rose by 368,000 jobs in May, after a loss of 2.3 million in April. Gains were seen at clothing stores, car dealerships, and general merchandise stores, a result of states reopening for business.
The May numbers were a dramatic improvement, but Frantantoni said the economy was still scuffling. “Note that we are still 13 percent below the level of employment pre-crisis, and the unemployment rate of 13.3 is the second highest level since the Great Depression,” he said. “This still represents an unbelievable amount of distress for almost 21 million households across the country.”
Contact Orion Jones at orion.jones@therealdeal.com