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The US lowers its unemployment rate against all odds and creates 2.5 million jobs

Although the situation generated by Covid-19 has not faded, the gradual opening of the economy led to the creation of these jobs in May.

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The unemployment rate in the United States fell by almost a point and a half percentage during the month of May, to stand at 13.3%, a month in which 2.5 million jobs were created according to figures published this Friday by the labour statistics office of the US Department of Labor.

Despite the fact that the situation generated by the Covid-19 has not yet completely faded the fifth month of the year, the gradual opening of the economy caused the creation of these 2.5 million jobs in May. In April, the pandemic suddenly destroyed 20.5 million jobs.

Despite the improvement, the unemployment rate is still at record highs. In October 2009, the peak of the global financial crisis that started in 2008, the unemployment rate in the United States reached 10%, while the all-time high was in December 1982, when it reached 10.8%. In this way, the unemployment rate escalated during April to its highest level since records began in 1948.

In terms of job destruction, the shock in March and April was so severe that the level of employed persons has still been at its lowest since 2011. The worst month for employment after the 2008 crisis and before the coronavirus crisis was produced in March 2009, when 800,000 jobs were destroyed.

The record for job destruction for the entire history series, which began in 1939, was recorded in September 1945. In that month, 1,959 million jobs were cut as a result of the end of World War II on the Pacific front after the surrender of Japan.

The number of long-term unemployed, those who have been unemployed for a minimum of 27 weeks, rose to 1,164 million people, equivalent to an increase of 225,000 unemployed. Their weight with respect to the total number of unemployed rose by more than 1 percentage point, to 5.6%.

On its side, the total number of unemployed people was 20,985 million people, so it fell by 2.09 million unemployed in March. For its part, the participation rate in the labor market grew six tenths, up to 60.8%. Compared to April, the active population grew by 1.7 million people.

By groups of workers, the unemployment rate among women was 13.9%, one and a half points lower than that of April, while among men it fell by 1.4 points, to 11.6%. Unemployment among young people fell to 29.9%.

In the fifth month of the year, the number of employees in the manufacturing and construction sectors grew by 669,000 people, while retail businesses hired 367,000 people and the health sector increased its workforce by 390,000 workers. The greatest increase occurred in the leisure, tourism and hospitality sector, which again hired 1.24 million people.

Trump’s words

In an extraordinary press conference that took place this Friday at the White House, the President of the United States, Donald Trump, criticized analysts, economists and businessmen “like Warren Buffett”, because most of them had predicted that during May millions of jobs would be destroyed.

In addition, the US president has assured that “the best is yet to come” since there are many important states in terms of volume of employment in the country, such as New York or California, where full openness has not yet occurred, so which in the coming months estimates that job creation will continue to pick up.

Trump has also warned that all this growth could be stopped suddenly if “left-wing policies”, such as raising taxes or the so-called ‘Green New Deal’, which Trump has described as “totally ridiculous”, begin to be applied. Presidential elections will take place in the United States in November, which Trump will attend to be re-elected for a second and last term.

On the other hand, the president has stated that he will propose a tax cut on workers’ payrolls, as well as that he will ask the United States Congress for more incentives to boost the revival of the economy.

The duration of the average work week increased by five tenths, to 34.7 hours in May. At the same time, median hourly earnings fell 29 cents from the previous month to $ 29.75.

Likewise, the Labor Department has reported that the number of jobs destroyed in March has been revised upwards, to 1.4 million (881,000 more), while the April data has been adjusted to -20.7 million jobs working (150,000 less).

Surprising figures

From IG, Aitor Méndez acknowledges that the official employment figures published this Friday in the US “blow up all forecasts” and once again highlight the enormous strength of the world’s leading economy in terms of employment and the labor market, which remains “one of the crown jewels of Uncle Sam’s economy”.

“Probably the most surprising figure is the evolution of employment, with the creation of 2.5 million jobs in May outside the agricultural sector, when the analysts’ consensus pointed out that the containment measures would be carried out by ahead of another 8 million workers”, says Méndez.

“This offers hope for a decent recovery in the US job market”, says Nordea analyst Morten Lund, although he cautions that several areas of the employment report released today point to the persistence of a risk of permanent significant harm.

In general, Lund acknowledges, today’s work report is difficult to judge, since, on the one hand, the creation of new jobs is encouraging, although it is not clear how much weight technical factors may have had. “Still, it is difficult not to be somewhat optimistic about it. It seems that the rehiring process has started slowly with the gradual reopening of the economy and the operation of the PPP (similar to the ERTE)”, he adds.

The May employment report generates “mixed feelings”, analysts Gregory Draco and Lydia Boussour point out from their part, since optimism for the creation of 2.5 million jobs is accompanied by skepticism due to the high number of requests for unemployment benefits registered since April and for the anguish over the 19.6 million jobs lost during the pandemic, double that during the financial crisis and 1.5 times all the jobs generated in the country during the last decade.

In this sense, experts anticipate a recovery “in two phases” of the US labor market, with rapid growth during the second half of 2020 as economic activity rebounds and a more gradual improvement between 2021 and 2023. Thus, the economy could recover 60% of lost employment by the end of the year, when the unemployment rate could be between 8% and 10%.

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