Thread by @GregDaco

Mixed feeling from May #jobsreport: optimism, skepticism & anguish:

- Optimism as payrolls +2.5mn – largest increase on record.

- Skepticism as gain contrasts sharply w/ new unemployment benefit since April.

- Anguish as the cumulative 19.6mn job losses from GCR is 2* GFC

Encouraging 2.5mn job gains concentrated in:
- leisure and hospitality (+1.2mn)
> with food services & drinking place (+1.4mn) making up 1/2 total gains
- construction (+464k)
- health services (+312k)
- #retail trade (+368k)
- #manufacturing (+225k)

But, strains on government budgets & lock down effects were apparent with 585,000 government job losses mostly in local education employment (-310k)

U3 #unemployment rate fell 1.4ppt to 13.3% – still much higher than its 1982 record of 10.8% – but well below the feared +20% we anticipated

Still, w/ millions classifying themselves as “employed but absent from work” in May, this understated the true unemployment rate by 3pt

The broader U6 underemployment rate, which captures marginally attached and underemployed individuals, fell 1.6ppt to 21.2%.

An encouraging development, but still the highest rate on record by far...

Since Jan, over 31.2mn workers have been affected by Global #Coronavirus Recession:

> 14.6mn more unemployed individuals
> 4.8mn more working but absent from work for “other reasons”
> 14.6mn more were working part-time for economic reasons
> 4.3mn falling out of labor force

It's very important to stress the massive decline in the labor force participation rate since the start of the year.

It rose 0.6% to 60.8% in May, but it remains near the early 1970s level.

Average hourly earnings fell 1.0% m/m, partially reversing the 8.0% surge in April – as job gains were concentrated in low-wage sectors.

This compositional effect pushed annual wage growth down to still artificially high 6.8% y/y.

More importantly, despite a 3.3% monthly rise, aggregate weekly payrolls were still down 6% y/y.

> This is a good personal income gauge

Going forward, we foresee a labor market recovery in two phases: rapid growth in H2 as economic activity rebounds from very low levels, followed by a more gradual recovery in 2021-2023