The US economy created 2.5 million jobs last month — the biggest monthly jobs gain since records began a century ago, albeit only a partial recovery from 22 million jobs lost during lockdown. These figures have blown expectations out of the water. Economists were expecting yet more unemployment: the consensus was an 8.3 million rise in unemployment hitting 20 percent in May, up from 14.7 percent in April. Defying the odds, unemployment actually fell to 13 percent, signaling an unexpectedly early start of the rebound of the US economy. The biggest winners were workers in hospitality, who made up almost half of the new jobs, followed by construction. ‘This is a mind-blowing number and shows that the economy is improving,’ said Naeem Aslam, chief market strategist at AvaTrade.
US unemployment still stands at 13 percent, but a recovery of this scale had not been expected. ‘It seems the damage to the nationwide lockdown was not as severe or as lasting as we feared a month ago,’ said Scott Clemons, chief investment strategist at Brown Brothers Harriman. For some time now, the stock market has looked as if it was expecting a V-shaped recovery, the likes of which started today with the FTSE100 up 100 points. Its future looks brighter still, as the new jobs data has indicated an ‘open of nearly 600 points higher for the Dow Jones Industrial Average’. It seems in America, the jobs recovery could be V-shaped too.
But can this comeback be replicated? The UK jobs market, for example, has not really adjusted due to the furlough scheme, whereby the government agrees to pay 80 percent of the wages of people whose jobs might otherwise be at risk. As acknowledged by Prime Minister Boris Johnson this week, the UK is facing more job losses before it starts to rebound. As well, the UK is moving at a snail’s pace out of lockdown compared to its European counterparts, and certainly compared to US states, all of which have meaningfully reopened large parts of their economy. While Americans dine alfresco at restaurants, head to the mall and even get ready for trips to Disney World and Las Vegas casinos, the UK has yet to confirm when hospitality and leisure businesses can properly re-open. The push from US workers to get back to it has undoubtedly contributed to America’s jobs boom — something yet to be seen in Britain, and (with the furlough scheme extended into the fall) that may not be seen for some time.
The question for America now is can it continue on this trajectory of spectacular job gains? The question for other western countries is when can they start to follow suit?
This article was originally published on The Spectator’s UK website.