Jumpin’ ju-ju bones, it’s raining winnamins ! ~ Analysts and economists were predicting May jobs report would show losses of around 7 to 8 million jobs in May. That’s what everyone suspected, and why they were stunned this morning to find out the U.S. economy actually added, yes ADDED, 2.5 million jobs.
The Bureau of Labor and Statistics released the good news data earlier today and shocked everyone. However, the results are really not that surprising when you think about how successful the Paycheck Protection Program (PPP) was. First this video is funny:
[BLS RELEASE] – […] Total nonfarm payroll employment increased by 2.5 million in May, reflecting a limited resumption of economic activity that had been curtailed due to the coronavirus pandemic and efforts to contain it.
- In May, employment in leisure and hospitality increased by 1.2 million, following losses of 7.5 million in April and 743,000 in March.
- Construction employment increased by 464,000 in May, gaining back almost half of April’s decline (-995,000).
- Employment increased by 424,000 in education and health services in May, after a decrease of 2.6 million in April.
- In May, employment in retail trade rose by 368,000, after a loss of 2.3 million in April.
- Employment increased in the other services industry in May (+272,000), following a decline of 1.3 million in April.
- In May, manufacturing employment rose by 225,000, with gains about evenly split between the durable and nondurable goods components.
- Professional and business services added 127,000 jobs in May, after shedding 2.2 million jobs in April.
- Financial activities added 33,000 jobs over the month, following a loss of 264,000 jobs in April.
- Wholesale trade employment was up by 21,000 in May, largely reflecting job gains in its nondurable goods component (+13,000). (link)
“Today’s report shows much higher job creation and lower unemployment than expected, reflecting that the re-opening of the economy in May was earlier, and more robust, than projected. Millions of Americans are still out of work, and the Department remains focused on bringing Americans safely back to work and helping States deliver unemployment benefits to those who need them. However, it appears the worst of the coronavirus’s impact on the nation’s job markets is behind us.”
The small business PPP program was designed to keep U.S. workers attached to their employers. The treasury funds became grants if the funds were used to cover payroll expenses and retain the employees within the business.
If the business did not retain or rehire their employees they would have to pay back the treasury under the terms of the PPP fund. That PPP rule was a massive incentive to re-hire anyone who was laid-off in the first several weeks of the shutdown.
I would suggest the majority of the re-hires, the jobs data that is shocking everyone today, is actually from small/medium businesses and directly relates to the way Treasury Secretary Mnuchin put the funding mechanism together by using the FDIC network.
Great plan. Great execution. Great results.