Stunning Jobs Report Shows Unemployment Dropped In May

The expectation among forecasters was unemployment could climb as high as 20 percent, but data released Friday showed it actually dropped to 13.3 percent.

Total non-farm payrolls rose by 2.5 million in May, bringing the total unemployment rate down to 13.3 percent, after reaching a mid-pandemic high of 14.7 percent last month. In total, the number of unemployed persons fell 2.1 million to 21 million, according to data released Friday by the U.S. Bureau of Labor Statistics.

“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 (COVID-19) pandemic and efforts to contain it,” the Bureau of Labor Statistics said in the release. “In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade.”

The real estate industry specifically will welcome the news contained in the report. Odeta Kushi, the deputy chief economist at First American, explained that the housing market was hit particularly hard in the previous report, with residential construction jobs falling to their lowest level since 2016. Jobs in residential construction increased by 9.2 percent in May, according to the report, and are now only 3.6 percent below May 2019.

“Today’s report is not only a signal that the broader labor market has started to rebound, but a bright spot for a housing market in desperate need of more supply,” Kushi said. “More hammers at work, more homes.”

The real estate sector, including leasing and rentals, saw huge gains, as well, adding more than 24,000 jobs in May. The total number of individuals employed in the sector was still below 2019 levels, however.

Private-sector forecasters had suspected the data, released Friday, would show unemployment reaching nearly 20 percent. Many questioned the accuracy of the numbers, citing that weekly new unemployment insurance claims continue to explode and numbered more than 2 million, every week of May.

Mohamed A. El-Erian, the chief economic advisor for financial services firm Allianz, wrote on Twitter that the top-line numbers are all counter to expectations he saw.

“In sum, a head-scratcher that needs analysis,” El-Erian wrote.

President Donald Trump, despite the questions, celebrated the numbers on Twitter in a series of tweets.