WASHINGTON _ The government reported Friday that the unemployment rate dropped to 13.3% last month after soaring to 14.7% in April, an unexpectedly positive turn that suggests the pandemic-induced recession may have hit bottom.
Most analysts had expected the rate would keep rising, perhaps as high as 20%.
But instead employers also added 2.5 million jobs in May after shedding a record-smashing 20.7 million positions the prior month, according to the Bureau of Labor Statistics.
California's unemployment and jobs statistics for May will be released in two weeks, and are likely to trail the nation's rebound, largely because of the mix of its industries and the fact that California has been slower to lift lockdowns and restrictions on businesses. The state's jobless rate in April was 15.5%.
The improvement reflects the reopening of businesses in many parts of the country, and it came as a huge surprise to analysts.
Economists on average were expecting another loss of about 7.5 million jobs in May, according to Moody's Analytics.
Moody's labor economist Sophia Koropeckyj noted that the collection rates for both the household and payroll jobs surveys _ from which the unemployment and job numbers are derived _ were lower than normal.
And government statisticians said the actual unemployment rate in May may have been 3 percentage points higher because many people may have misclassified themselves by saying they were absent from work, even though they were laid off and should have been counted as unemployed.
Although the report provided a glimmer of good news, most mainstream economists fear that recovery will be long and slow.
"The bounce-back started earlier than most expected, but don't get too excited about this one month of data," said Nick Bunker, research director at Indeed Hiring Lab. "Job growth rising by 2.5 million and the unemployment rate dropping by over a percentage point are positive developments. But it's not clear how enduring this will be. Furthermore, the labor market is still in a terrible spot with employment only 87% of where it was before the coronavirus crisis began."
No matter how quickly or completely America opens the doors for business again, many analysts said, full recovery is expected to take at least three to five years. If a second large wave of infections occurs in the fall, as epidemiologists say it could in at least some parts of the country, the outlook could be even darker.
"The hole we're in is just so deep," said Heidi Shierholz, former chief economist at the U.S. Labor Department and now with the Economic Policy Institute. "Even if you get a fast bounce-back, it could still be bad. I do think it's going to be a long haul."
Before Friday's report, David Shulman, a senior UCLA economist, said he was expecting May to be the low point of the recession. "It now looks like April was the bottom," he said.
Shulman said he and his colleagues at the UCLA Anderson Forecast were now likely to revise their outlook, to be released June 24. Earlier he said unemployment for both the state and the nation was likely to remain in double digits through 2022. "That's probably off the table," he said.
At the same time, Shulman and other economists said the latest jobs report appeared to be inconsistent with government data showing more than 31 million people received jobless benefits in May. "So are 10 million people getting paychecks from employers and collecting unemployment benefits too?" asked Christopher Rupkey, chief financial economist at MUFG Bank in New York.
What's more, the past week's nationwide protests only complicated matters, with economic uncertainties created by damage to businesses and the potential increase in COVID-19 infections as a result of people abandoning social distancing in mass demonstrations.
Stephen Moore, a member of President Trump's economic task force, also foresees added economic pain as a result of the protests: "These riots put a new twist on everything. It's bad from an economic perspective. Just at a time when businesses were starting to reopen and we're starting to make a little progress _ then boom! _ we get hit with this."
