Alvin Liew at UOB Group’s Global Economics & Markets Research assessed the latest release of the US Non-farm Payrolls for the month of May.
Key Quotes
“Stunning, truly stunning. What was expected to be another month of job losses into the millions… turned out to be a record 2.51 million jobs gained in May (the most since at least 1939 while the previous above 1 million monthly print was way back in September 1983 at 1.1 million). The May NFP jump was in sharp contrast to the recent ADP report which saw 2.8 million job losses.”
“In line with the job gains, US unemployment rate eased to 13.3% (from 14.7% in April) even as the labor participation rate climbed higher to 60.8% in May, from 60.2% in April which was the lowest since January 1973 (60.0%). Two crucial issues are in focus for the improved unemployment rate. First, it was uneven as unemployment among white men saw a decline to 10.7% (from 12.4%) and white women also saw a decline to 13.1% (from 15.0%) but African-Americans saw a slight uptick of 0.1ppt to 16.8% even as African-American men’s rate fell to 15.5% (from 16.1%). Asian Americans fared the worst, as their unemployment rose by 0.5ppt to 15%. The other more serious issue was that BLS highlighted a persistent misclassification of a large number of workers as ‘absent’ from work instead of “unemployed on temporary layoff” in March, April and May. In Its FAQ, the BLS estimated that if the misclassification error did not occur, then unemployment rate may be 3.1ppt higher at 16.4% in May versus the official estimate of 13.3%, while April’s rate could be at 19.8% (versus 14.7% reported) and March at 7.5% (versus 4.4% reported).”
“The private sector was entirely responsible the jobs gains with 3.09 million while the government lost another 585,000 jobs, again mainly due to school closures to contain COVID-19.”
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