Jobs Report Continues To Disappoint Under Biden Administration Despite Shrinking Unemployment Rate

Job report for May missed the estimate by a huge margin as employers failed to bring America’s workforce back to life due to extended unemployment benefits that encouraged Americans to continue to stay home.

Only 559,000 jobs were added in May which was estimated to be over 1,250,000 jobs that analysts were expecting.

The unemployment rate, meanwhile, declined 0.3 percentage points to 5.8%, it's lowest since the pandemic caused businesses to shut their doors in March 2020.

Despite the gains, the U.S. economy has 7.6 million, or 5%, fewer workers from its February 2020 pre-pandemic level.

"Only a few months ago we had expected to see several months' worth of gains north of one million as the economy reopened, but labor supply is bouncing back much more slowly than demand," said Paul Ashworth, chief U.S. economist at research firm Capital Economics.

The leisure and hospitality sector added 292,000 workers as COVID-19 restrictions continued to ease across most of the country. Almost two-thirds of those gains, or 186,000 jobs, were in food services and drinking places. Strong gains were also seen in amusements, gambling, and recreation (+58,000) and in accommodation (+35,000). The sector has 2.5 million, or 15%, fewer jobs than before the pandemic.

Meanwhile, the resumption of in-person learning in more parts of the country boosted employment in public and private education with gains in local government education (+53,000), state government education (+50,000), and private education (+41,000).

Solid gains were also seen in health care and social assistance (+46,000), information (+29,000), manufacturing (+23,000), transportation and warehousing (+23,000) and wholesale trade (+20,000).

U.S. companies have had a difficult time finding workers as a supplemental unemployment benefit of an extra $300 per week has encouraged many to stay home. At least 25 states have announced plans to end the benefits earlier than their September expiration.

"With unemployment benefits set to fade in the fall, we may be waiting until the end of summer before we see clear evidence of a fundamentally healing labor market," said Seema Shah, chief strategist at Principal Global Investors.

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