US unemployment unexpectedly fell in May as the world's largest economy added 2.5 million jobs.
The data surprised everyone as financial analysts had anticipated that 8 million jobs would be lost. The unemployment rate fell from 14.7 per cent in April to 13.3 per cent last month.
The Labor Department said in its release: “These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April.”
The report showed that the jobs market improved considerably in the second half of May as businesses reopened after shutting in mid-March to slow the spread of COVID-19.
In London the FTSE 100 shot higher, up 97.40 points at 6438.84. Stocks have been rising around the globe over the past two weeks on signs that the world economy is slowly starting to get back to normal.
Naeem Aslam, analyst at Avatrade said: "The US unemployment rate has shocked everyone. Speculators were whispering for 20% unemployment. This a mind-blowing number and shows that the economy is improving. Things are not as bad as many thought. This data, if it is a true reflection of the economy, is likely to speed up the recovery for the US economy."
Paul Craig, portfolio manager at Quilter Investors, added: "These numbers show the worst may well be behind us. It is critical that rehiring and return-to-work continues going forward given statisticians are saying that large swathes of the population are “employed but absent”. Positively there seems to be a lot of re-hiring in the hospitality sector and manufacturing, suggesting America is on the move once again.
“We were worried by the pace of decline in employment in previous months, so this is a good indication that it might not be as bad as feared. In fact it is a positive surprise to see the pace of the re-opening and economic activity."
President Trump took to Twitter to claim credit for the improvement.
He tweeted: “Really Big Jobs Report. Great going President Trump (kidding but true)!”
