Two new gauges of U.S. employment reinforced hopes Thursday that the recovery in the job market is back on track after a disappointing April.
Not only did the number of people initiating claims for unemployment insurance fall below 400,000 for the first week since the start of the pandemic, according to the latest data from the Department of Labor, but a report from payroll company ADP showed that private companies added 978,000 people to their rosters in May, more than in any other month since last June and far more than the 650,000 economists had predicted. Service-providing businesses accounted for most of the gain, with the leisure and hospitality sector alone adding 440,000 jobs. All but the information sector added workers.
Taken together, the data is a positive sign for the job market in the lead-up to the government’s May employment report, due out Friday. Faith in the strength of the recovery was shaken some after a predicted hiring boom in April fizzled out despite a record number of available jobs. Oxford Economics projects Friday’s report will show the U.S. added 854,000 jobs in May, the most since last August.
“We expect the May jobs report to show the labor market recovery regained momentum,” Nancy Vanden Houten, lead economist at Oxford Economics, said in an email commentary.
The U.S. lost 22.4 million jobs in the first months of the pandemic, and still has 8.2 million to recover. The two reports Thursday may signal that the recovery had merely stalled in April, hurt by a shortage of available workers. Lack of childcare, anxieties about contracting the virus, and perhaps even the federal supplement to weekly unemployment insurance benefits may be keeping people from returning to the workforce, some economists say, even as the economy shakes off the pandemic with surging consumer demand and a gradual return to normalcy.
In the week through May 29, there were 385,000 initial unemployment claims, 20,000 fewer than the week before and 357,000 less than just eight weeks earlier, according to seasonally adjusted data released by the Labor Department.