Unemployment Rate Falls to 13.3% as Many Return to Work

Amid the Covid-19 pandemic, the US economy seems to have hopes for quick recovery as the job market is rapidly recovering compared to expectations.

In May, the US unemployment rate fell to 13.3%, and the economy gained 2.5 million jobs. The percentage is nothing compared to the millions of Americans that remain unemployed, however, it still shows that the economy has begun to recover. The US economy has seen the worst unemployment rates since the Great Depression, yet, at the same time, it has recorded the largest monthly gain in new jobs since 1939, based on the data series of the Bureau of Labor Statistics.

Compared to April, the month of May is a stepping stone, rebounding from severe losses incurred in April. The unemployment rate for last month rose 14.7% following the shutdown of many businesses during the Covid-19 pandemic lockdown. According to the Labor Department, the percentage would have been higher as millions of Americans were classified as “employed but not at work,” rather than counting them as “unemployed on temporary layoff.” If the actual numbers were captured, the unemployment rate would have been higher at 19.2% in April and 16.1% in May, with the exclusion of seasonal adjustments.

“It seems the damage from the nationwide lockdown was not as severe or as lasting as we feared a month ago,” said Scott Clemons the chief investment strategist at Brown Brothers Harriman.

Based on experts’ estimates for the month of May, there were expectations for 19.5% to 8.3 million jobs lost. The expectations were way off what economists had estimated. The nature of the economic shutdown has made it quite difficult to rightly predict what turn the economy would take next. On the flip side, if the predictions actually occurred, the month of May would have held the record for the worst figure since the Great Depression.

The sudden rise of the jobs market, created a ripple across major markets, especially the stock market. Following the positive outcome of May, the Dow Jones Industrial Average gained 800 points on Friday. Government bond yields also performed well, with benchmark 10-year Treasury at 0.91%.

While the rest of the economy jubilates over the improvement, some economists have expressed dissatisfaction, hoping that there will not be more cases of job losses. A major concern for economists is that job losses will not be permanent as “78% of the people who lost their jobs believed that the loss would be temporary,” according to Clemons.