May payrolls report surprises

Payrolls in the USA, which is expected to decrease by 8 million in May, increased by 2.5 million while unemployment, which is expected to increase to 19.7%, decreased to 13.3%.

Payrolls in the USA, which is expected to decrease by 8 million in May, increased by 2.5 million while unemployment, which is expected to increase to 19.7%, decreased to 13.3%. The increase in employment seems to have resulted from regional re-openings in a certain period of May. According to the data revised in April in the manufacturing industry, 225 thousand people returned to work in May, compared to 1.3 million jobs lost in the previous month. In the private sector, which lost 19.7 million jobs in April, there is an increase of 3.1 million. In the public sector, employment loss continues. Overall, the 2.5 million increase achieved in May after more than 20 million losses in employment can be considered positive in that it does not indicate a new wave of layoffs.

While the unemployment rate decreased to 13.3%, there was a significant outflow of the labor force in layoffs during the pandemic process. For this reason, the decrease in the long-term unemployment, which I think may be a good indicator in this period, from 22.8% to 21.2%, shows that there are individuals who have either started working or looking for a job by returning to the labor force again. The participation rate increased from 60.2% to 60.8%; of course, it needs to rise above 62% in order to approach normal conditions. The decrease in the working hours to 34.2 in April had been caused by the shortening of the working hours of the firms due to the epidemic, in May there is a recovery to 34.7 thanks to reopenings of some firms. Artificiality in wages continues under unusual conditions. Due to the low income employees who were laid off in April, wages increased by 4.7% and 8% annually, naturally fell by 1% monthly in May, but the unusual conditions of the pandemic are still reflected in annual data with 6.7% wage inflation.

As a result; In May, with partial openings, some are returning to work, but a significant portion of the labor force capacity remains idle, and only 2.5 million of the loss over 20 million in the previous month has returned. Return to work should accelerate in June and beyond, but unemployment will be higher than the pre-virus period for a predictable period.

Source: Tera Menkul
Hibya News Agency

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