The United States added a record number of jobs in the past month, the U.S. Department of Labor reports.
“Total nonfarm payroll employment rose by 2.5 million in May, and the unemployment rate declined to 13.3 percent,” the U.S. Bureau of Labor Statistics reported on Friday morning.
Economists had forecast 8.3 million in further job losses for May, a projected 19.5 percent unemployment rate, in a Dow Jones survey. The reported employment numbers are almost 11 million above the prediction. Unemployment is 6.2 percentage points better than expected.
“It’s certainly a shocker,” Tony Bedikian, head of global markets at Citizens Bank in Boston, told the Boston Globe.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, called the report the “biggest payroll surprise in history,” TheStreet reported.
Stocks rose rapidly after the announcement, with the Dow Jones Industrial Average increasing by 938 points, a 3.6 percent rise, and the NASDAQ up by 2.3 percent, by early Friday afternoon.
“For the week, the Dow is on pace to rise 7.3%, the S&P 500 5.2% and the Nasdaq 3.5%,” MarketWatch reports.
“Jobs data shocked investors Friday, showing a labor market that rebounded in May and defied expectations for another harsh decline,” Bloomberg News reported. “Stocks extended gains, while Treasury yields spiked.”
Sectors hit hard by the coronavirus lockdowns recovered strongly in May, BLS reports.
“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 BLS reported. “In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade. By contrast, employment in government continued to decline sharply.”
President Donald Trump heralded the news on Twitter on Friday morning.
“It’s a stupendous number,” Trump wrote. “It’s joyous, let’s call it like it is. The market was right. It’s stunning!”
“Really great numbers by any standard – UNBELIEVABLE!” Trump added in a subsequent tweet.
“In the greatest miss in forecasting history, the May jobs report demonstrated that America is going back to work,” David Donabedian, chief investment officer of CIBC Private Wealth Management, told Business Insider.
The unemployment rate had risen at a record pace during the two previous months because of the government-mandated shutdowns of activity in response to the coronavirus.
“The unemployment rate declined by 1.4 percentage points to 13.3 percent in May, and the number of unemployed persons fell by 2.1 million to 21.0 million,” the BLS reports. “Reflecting the effects of the coronavirus pandemic and efforts to contain it, the unemployment rate and the number of unemployed persons are up by 9.8 percentage points and 15.2 million, respectively, since February,” the BLS reports.
“If confirmed by readings in the coming months, this would suggest the worst is over for the labor market, which would be a positive for the consumer, consumption, and economic growth, which we expect to trough in the second quarter,” Sameer Samana, a senior global market strategist at the Wells Fargo Investment Institute, told Bloomberg News.