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May Employment Report Shows Unexpected Improvement

Tom Cunningham, PhD
June 5, 2020
Read Time: 0 min

This morning’s employment situation report for the month of May was genuinely amazing – and unexpected. Market expectations were for a headline unemployment rate of about 19.7% and job losses for the month to total between 8.3-8.5 million. That wasn’t the result.

The headline unemployment rate fell from 14.7% to 13.3%, and employment increased by 2.5 million jobs.

Functionally, I can stop right there.

Employment by sector was uneven. Government employment generally fell while the private sector, with the exception of some retail and some health care, generally rose. The broadest measure of labor underutilization, U6, fell from 22.8% to 21.2%.  The labor force participation rate increased by 0.6%. Additionally, the previous two months were revised down (more job losses).

This is genuinely surprising. The market had anticipated another dismal month for May, and that is quite the opposite of the latest BLS report. Many economists predicted that the Paycheck Protection Program (PPP) would play a big factor in the June employment report, but it appears to have made a significant impact in May. While there is a lot of nuance in the report, that subtly is overwhelmed by the fact that the markets missed the outcome by over 10 million jobs.  

It will probably be an interesting day in the markets.

About the Author

Tom Cunningham, PhD

Senior Advisor- Economics
Tom joined the Federal Reserve Bank of Atlanta as an economist with the macropolicy group in 1985. He was promoted to senior economist in 1989 and to research officer and senior economist with responsibility for the regional group in 1992. Cunningham retired in 2015 after a 30 year career. He

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