June 30, 2020 (Courtesy Hellenic Shipping News) Nearly all U.S. states added jobs last month, as business reopenings allowed most areas of the country to start recovering from huge employment losses endured earlier in the coronavirus pandemic.
Texas added the largest number of workers in May, the Labor Department said Friday, followed by Pennsylvania and Florida. The nation as a whole added about 2.5 million jobs in May, though employment was still down by about 20 million jobs since February.
Unemployment rates fell in 38 states and Washington, D.C., last month, when the U.S. jobless rate declined to 13.3% from April’s 14.7%, a post-World War II high.
The new report indicated that payroll gains across the country were widespread in May, as businesses began to slowly reopen with social-distancing guidelines and other restrictions in place.
“Reopening really has led to economic activity and confidence picking up so far,” said Guy Berger, economist at LinkedIn, adding that “this improvement varies a lot from state to state.”
Despite the monthly pickup, employment was lower in all states, compared with a year earlier, and unemployment rates remained at levels unseen since the Great Depression, suggesting a long road to recovery. California, the most populous U.S. state, had a 16.3% unemployment rate in May, down slightly from April.
Adam Kamins, director at Moody’s Analytics, said states where coronavirus cases were on the rise in late April and early May were some of the worst performers. The Washington, D.C., area saw the largest job losses last month, while other states such as Iowa, Nebraska and South Dakota experienced slow employment growth.
“This once again reinforces that the virus’s course will determine the pace of economic recovery,” he said.
Employment also declined in Hawaii in May. Jobs in Hawaii in leisure and hospitality, which accounted for about one in five jobs last year, declined to about 53,000 in May from 57,000 in April. Trade and transportation jobs were down slightly on the month.
The state-level jobs data reflected many of the industry trends playing out at the national level. In the U.S. as a whole last month, restaurants and bars added 1.4 million workers as many states began lifting shutdown orders. Friday’s data showed leisure-and-hospitality jobs had bottomed out in regions across the country.
Mr. Berger said it is easier for certain industries such as restaurants to switch on and switch off, helping them bring back workers faster. “You essentially furlough people and then you reopen the restaurant,” Mr. Berger said.
In 29 states, hiring in leisure and hospitality accounted for at least half of the overall increase in payrolls from April to May. However, the industry generated just 9% of the job gains in Michigan, where restrictions on dine-in restaurant service weren’t eased until the end of May.
Construction jobs drove much of the payroll gains in New York, Washington state, Massachusetts and Pennsylvania, states that had barred most types of construction during April, but began relaxing those in May.
Many states with the sharpest declines in joblessness were also those that were among the first to lift restrictions on businesses. Mississippi’s unemployment rate fell 5.7 percentage points from April to May, while Indiana’s dropped 5.2 percentage points. Alabama, Arizona and Tennessee — all of which cleared services such as restaurant dining and personal-care services to reopen in early May — also saw sharp declines.
However, reopening didn’t benefit states evenly. Texas’ unemployment rate fell just 0.5 percentage points in May.
Part of that could be due to the makeup of states’ economies. States with large energy sectors such as Texas likely suffered from a collapse in oil demand caused by the pandemic, offsetting some of the boost from rehiring. Oil prices only just began to recover in mid-May.
Government payrolls were on a clear descent across the nation into May. In the Midwest, government payrolls decreased about 8%, compared with January.
Economists expect that the drops in state-and-local government payrolls, driven by state budget squeezes, could take years to recover, as was the case after the 2007-09 recession.
Source: Dow Jones