Unexpected rebound in May for US labour market

The United States' labour market unexpectedly rebounded last month, signalling that the economy is picking up faster than thought from the depths of the damage caused by the coronavirus pandemic.

Non-farm payrolls rose by 2.5 million after a 20.7 million tumble in the prior month that was the largest in records dating back to 1939, according to US Labour Department data yesterday.

The jobless rate fell to 13.3 per cent from 14.7 per cent.

The latest figures may give a boost to President Donald Trump, who has fallen behind Democratic challenger Joe Biden in polls amid the pandemic, recession and nationwide protests over police mistreatment of African Americans.

Minutes after the release, Mr Trump tweeted: "Really Big Jobs Report!"

This was followed by a triumphant news conference at the White House, where he warned against electing Democrats in November. "The only thing that can stop us is bad policy," he said.

"Left-wing, bad policy of raising taxes and green new deals."

Economists had forecast a decline of 7.5 million in payrolls and a jump in the unemployment rate to 19 per cent. No one in Bloomberg's survey had projected improvement in either figure.

Treasury yields and US stock futures jumped after the surprise report, while the dollar spiked against the yen.

The unexpected improvement was not limited to US figures - Canadian employment rose 290,000 in May, compared with forecasts of a slump of 500,000, its statistics office reported yesterday.

The data shows a US economy pulling back from the brink as states relax restrictions and businesses bring back staff, while supporting a stock market rebound.

At the same time, the lack of an effective treatment for Covid-19 - which has killed more than 100,000 in the US - means infections may persist and surge in a second wave, which could further shake the labour market and extend the economic weakness.

"These improvements in the labour market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic," the Labour Department said.

It noted, however, that the unemployment rate "would have been about 3 percentage points higher than reported" if data were reported correctly. It referred to workers who were recorded as employed but absent from work due to other reasons, rather than unemployed on temporary layoff.

Mr Trump said the numbers should encourage governors to speed up the lifting of stay-at-home orders and other measures intended to slow the spread of the virus.

BLOOMBERG