The U.S. economy gained 559,000 jobs in May 2021. The job gains reflect the continued impact of the COVID-19 pandemic.
May's gains help make up for the jobs lost since April 2020, when the economy lost a record 20.5 million jobs when businesses shut down to slow the spread of the COVID-19 pandemic.
As of May 2021, there were roughly 4 million more unemployed people than in February 2020, the month before the pandemic. The big swings in job losses and job gains in 2020 and 2021 reveal the tremendous impact the pandemic has had on the U.S. economy.
As the chart below shows, job gains have decreased significantly since June 2020 and reversed in December. Gains during the first quarter of 2021 have made a small dent in the job losses.
Where Jobs Were Added
The leisure and hospitality industry added 292,000 jobs in May. This is after losing more than 7 million jobs between March 2020 and April 2020. The sector typically added 5,000 to 40,000 jobs before the pandemic.
The pandemic further damaged an already weakened retail sector. Store managers have been slashing jobs since March 2017. Online sales have cut into brick-and-mortar store sales. That's been especially true during shelter-in-place.
Government employment increased by 67,000 jobs.
Health care and social assistance added 45,800 jobs in May after adding 35,600 in April. Wholesale trade added 19,900 jobs after adding 6,200 jobs in April.
The information sector gained 29,000 jobs in May after gaining 9,000 in March. This sector, especially Silicon Valley, is critical to American global competitiveness.
Professional and business service jobs gained 35,000 jobs, and temporary help services gained 4,400. Both of these areas saw steep losses in April, 81,000 and 115,800, respectively. Companies add temporary workers when they aren't sure they will need permanent positions. That's especially true during the early stages of recovery.
The motor vehicle industry turned around a downtrend in May to add 24,800 jobs. This comes after losing 37,700 jobs in April.
Where Jobs Were Lost
Construction lost 20,000 jobs in May, continuing a downtrend that saw the industry lose 5,000 jobs in April.
Financial activities lost 1,000 jobs after gaining 16,000 jobs in April. Banks continued to function during the pandemic but limited the number of people in branch offices. Even before the pandemic, banks had been adding fewer positions as the Fed lowered interest rates. Lower rates reduce profitability to lenders because they must charge less for loans.
Here are other areas with job losses:
- The retail industry lost 5,800 jobs after losing 30,200 jobs in April.
- The utilities sector dipped slightly, shedding about 200 jobs.
The US Jobs Report Explained
The monthly jobs report is also called the "Employment Situation Summary" and the "Non-Farm Payroll Report." It's a critical economic indicator because it's the first report of the month. It's also the most comprehensive and credible.
The Bureau of Labor Statistics surveys 160,000 non-farm businesses and agencies on the number of jobs, the wages paid, and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours, and how fast salaries are increasing.
The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers' age, sex, and race/ethnicity. The household survey has a more expansive scope than the establishment survey. It includes the self-employed, unpaid family workers, agricultural workers, and private household workers. They are excluded by the establishment survey.
The household survey is not as accurate as the business establishment report, though. It has a smaller sample size. That's why employment numbers are taken from the establishment survey. So the current unemployment statistics often show a different trend than the jobs report.
Other Jobs Reports
There are two other jobs reports. The monthly ADP National Employment Report is released on the Wednesday before the Employment Situation Report. It's produced by the ADP Research Institute, SM, and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming, as does the BLS report. But more importantly, it also excludes government jobs, which are included in the BLS report. For that reason, it's considered incomplete.
The ADP Report is useful because it's released the just before the BLS report, giving you an idea of what to expect from the BLS.
The ADP report gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it's not intended to be predictive. Like the BLS report, it's revised as more data comes in later in the month. These revised numbers are 96% correlated with the revised BLS jobs report.
The Department of Labor also releases a weekly jobless claims report. This measures the claims for initial unemployment benefits reported by each state every week. It also says how many of the unemployed are still receiving benefits. This report gives an indication of trends, whether there are more or less of the unemployed than the week before.
The main value of this report is that it is weekly and so it gives some idea of trends between the monthly jobs reports. It isn’t accurate when predicting the monthly report because it is volatile.