There is good news in the jobs report for May, if unexpected.
Update: There is an error in the estimates made from the household survey, meaning the unemployment rate is higher than reported below. See The misclassification error in the May 2020 jobs report for more on this.
The headline number from the jobs report released today by the Bureau of Labor Statistics, part of the United States Department of Labor, is that the unemployment rate fell in May as the number of people with jobs rose.
Specifically, the number of employed people rose from 133,403,000 in April to 137,242,000 in May (2.9 percent). The number of unemployed persons fell from 23,078,000 to 20,985,000 (9.1 percent). The civilian labor force rose from 156,481,000 to 158,227,000 (1.1 percent).
These numbers produced an unemployment rate of 13.3 percent, down from 14.7 percent in April. This data is from the household survey, which counts people.
From the establishment survey, which counts jobs, the number of nonfarm jobs rose from 130,403,000 in April to 132,912,000 in May, an increase of 2,509,000 jobs (1.9 percent).
This is great news, and many forecasts called for job losses in the range of eight million instead of the 2.51 million gained.
A few notes of caution: The BLS figures are estimates gathered by surveying a sample of households and business firms. They are subject to both sampling and nonsampling errors. BLS has told of impacts on data collection and estimation methodology due to the pandemic, and there could be errors in both.
The uncertainly in gathering data is illustrated by private forecasts of a loss of many jobs instead of the gain estimated by BLS. Further, the survey conducted by the payroll processing firm ADP estimated a loss of 2.76 million jobs in May — quite a difference from the gain of 2.51 million jobs estimated by BLS.
Generally, the BLS and ADP estimates are close to each other. The ADP estimate is a respected report that is watched closely. The numbers for May were released on Wednesday, two days before the BLS release.
The ADP estimate — a loss of 2.76 million jobs — was viewed as a positive outcome, as many forecasts called for much larger losses. When interviewed on Fox Business News Wednesday, White House Senior Adviser and former Chairman of the Council of Economic Advisers Kevin Hassett said this of the ADP estimate:
This number so much below expectation or what you would get if you built up from the claims data that I wonder about it. And I’ll go back to my desk and study it. But I — I — the number is so good, it’s such good news, that I really have to dig deep into it and see if there’s not something funny going on because that’s pretty far removed from what we would get if we just added up the claims data and so on from the last survey week. (emphasis added)
So at least one economist in the Trump administration must be surprised at the BLS estimate.
BLS data is subject to two monthly revisions. For example, the report released the first Friday in May gave 131,045,000 as the number of nonfarm jobs in April. Today’s report revised that to 130,403,000, a value 642,000 lower (0.49 percent). The March report gave 151,786,000 for the number of jobs in that month. That has been revised to 151,090,000, a value 696,000 lower (0.46 percent).