U.S. Job Creation Recovers in April

Written by David Schollaert

The U.S. economy recovered from the disappointing showing in April by adding 559,000 new jobs in May, the Bureau of Labor Statistics (BLS) reported. Although fewer workers were added to the payroll than the 700,000-plus forecasted by economists, the May jobs report was in line with February and March totals. The gains underscore the positive impact of steady reopening efforts across the U.S. marketplace. Of particular note were job gains in leisure and hospitality, public and private education, and health care and social assistance.

Manufacturing employment rose by 23,000 in May, a positive turn after decreasing by 18,000 the month prior. Manufacturing payrolls remain 509,000 below pre-pandemic totals in February 2020. Employment in construction waned by 20,000 in May, reflecting a job loss of 17,000 in nonresidential specialty trade contractors. Construction employment is 225,000 lower than in February 2020, before the pandemic. Figure 1 shows the total number of nonfarm employed people in the U.S. since 2000.

EmpNetJob Figure1

“Total nonfarm payroll employment increased by 559,000 in May, following increases of 278,000 in April and 785,000 in March,” the BLS said. “In May, nonfarm payroll employment is down by 7.6 million, or 5.0% from its pre-pandemic level in February 2020. Notable job gains occurred in leisure and hospitality, in public and private education, and in health care and social assistance in May.”

“In May, employment in leisure and hospitality increased by 292,000, as pandemic-related restrictions continued to ease in some parts of the country. Nearly two-thirds of the increase was in food services and drinking places. Employment also rose in amusements, gambling, and recreation and in accommodation. Employment in leisure and hospitality is down by 2.5 million, or 15.0% from its level in February 2020,” the BLS added.

The historical picture for the duration of unemployment since January 2000 is broken down into <5 weeks, 5 to 14 weeks, and >15 weeks, noted below in Figure 2. The total number unemployed was 8,829,000 at the end of May, a decrease of 391,000 compared to April. Although unemployment remains above pre-pandemic levels by nearly 1.5 million people, about 13.7 million more people now have jobs compared to the 22.5 million thrown out of work during the worst of the pandemic in the spring of 2020. As of June 9, 57.5% had been unemployed for more than 15 weeks, 20.3% for 5 to 14 weeks, and 22.2% for less than 5 weeks.

EmpNetJob Figure2

The official unemployment rate, U3, reported in the BLS Household survey (see explanation below) increased from 3.5% in February 2020 to 14.7% in April 2020. It recovered to 5.8% in May 2021. The more comprehensive U6 unemployment rate, at 10.2% last month, was a big improvement from 22.8% in April 2020 (Figure 3). U6 includes individuals working part time who want full-time work and those who want to work but are so discouraged they have stopped looking.

EmpNetJob Figure3

The labor force participation rate is calculated by dividing the number of people actively participating in the labor force by the total number of people eligible to participate. This measure was 61.6% in May, down 0.1% from the month before, and still just marginally up from 60.2% in April 2020 – shortly after the pandemic sent the economy into a nosedive. The measure still lags the pre-pandemic reading of 63.3% reported in February 2020. Another gauge, and more definitive view, are the number employed as a percentage of the population. Last month, the employment-to-population ratio was 58.0%, again, a marginal change of just 0.1% higher month on month, but up from the low point of 51.3% in April 2020. Figure 4 shows both measures on one graph.

EmpNetJob Figure4

Initial claims for unemployment insurance, which are reported weekly by the Department of Labor, have been on a steady decline since early-to-mid April, building optimism for the labor market. New filings totaled 385,000 in the week ending June 5, down from the most recent high of 744,000 just two months ago, and besting consensus expectations for a more modest decline, according to

“Though layoffs remain elevated relative to those seen pre-pandemic, they are not the biggest issue for the labor market recovery; the lack of labor supply is,” said. “Labor supply is likely weighing on hiring and keeping continuing claims from dropping more quickly. The number of those filing for Pandemic Unemployment Assistance declined from 93,559 to 76,098 in the week ended May 29.”

Continuing claims, a loose proxy for hiring, rose from 3.60 million to 3.77 million in the week ended May 22. The repeated drops in initial claims provides further evidence that the labor market is gaining momentum. Figure 5 shows the four-week moving average of new claims since January 2007.

EmpNetJob Figure5

Human resources consulting firm Challenger, Gray and Christmas Inc. produces a monthly employment update for the U.S. It reported that job cuts in May were 24,586, up 7.3% from the 22,913 reported in April. May’s total is down 93.8% from the 397,016 job cuts seen in May 2020 during pandemic. Year to date, employers have announced plans to cut 192,185 jobs from their payrolls, down 86% from the 1,414,828 jobs eliminated through the same period last year. The three-month moving average (3MMA) has declined in each of the last 11 months. Figure 6 shows the monthly job cuts reported by Challenger on a 3MMA basis since January 2007.

EmpNetJob Figure6

“Many employers, especially those hit hard during the pandemic, such as Retailers and Hospitality and Leisure companies, are having a difficult time finding workers,” Challenger reported. “Many are offering signing bonuses or higher wages to attract workers.”

“As the labor market tightens, as is typical, workers may find employers offering more attractive perks and benefits, including higher starting wages, as they look for positions,” he added. “In fact, according to the latest data from the Bureau of Labor Statistics, the average hourly wage rose to $30.17 in April from $29.96 in March.”

Explanation: On the first Friday of each month, the Bureau of Labor Statistics releases the employment data for the previous month. Data is available at The BLS reports on the results of two surveys. The Establishment survey reports the actual number employed by industry. The Household survey reports on the unemployment rate, participation rate, earnings, average workweek, the breakout into full-time and part-time workers and lots more details describing the age breakdown of the unemployed, reasons for and duration of unemployment.

By David Schollaert,

David Schollaert

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