May Employment Preview

On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus is for a decrease of 8,250,000 non-farm payroll jobs, and for the unemployment rate to increase to 19.7%.

Last month, the BLS reported 20,500,000 jobs lost in April and the unemployment rate increased to 14.7%.

The job losses in April were the worst on record (series started in 1939), and the losses in March were the ninth worst on record. The previous worst jobs report was after WWII.

The job losses in May will be the 2nd worst on record, but there is a wide range of estimates.

Worst Monthly Job Losses Since 1939
Rank Date Jobs Lost (000s)
1 Apr-2020 -20,500
2 Sep-1945 -1,959
3 Oct-1949 -838
4 Mar-2009 -800
5 Jan-2009 -784
6 Feb-2009 -743
7 Nov-2008 -727
8 Dec-2008 -706
9 Mar-2020 -701
10 Apr-2009 -695

Merrill Lynch economists wrote: “We expect -8mn in May nonfarm payrolls and the unemployment rate to jump to 19% from 14.7%. “

However, the ADP report only showed 2.76 million private sector jobs lost in May.

The usual indicators are somewhat useless again this month.  They are signaling significant jobs losses, but we’ve never seen anything remotely close to the job losses that happened in April and May.

For example, the ISM manufacturing employment index increased in May to 32.1% from 27.5% in April (both readings are very low). And the ISM non-manufacturing employment index increased in May to 31.8% from a record low 31.0% in April.  Combined, these surveys suggests significant job losses, but fewer than in April.

• Conclusion: The number of jobs lost in May will be huge, and this will be the 2nd worst jobs report on record.   But the number of jobs lost could be anywhere from a few million to 8 or 9 million.  My guess is the number of jobs lost will be lower than the consensus.