May Jobs Report a Major Surprise - Evidence of a Turning Point?

From the desk of Dan Seder, CFA, CMT, CFP®

The Bureau of Labor Statistics May employment report was a surprise – equity markets popped higher and yields climbed at the open. Economists forecasted a loss of 8.33 million jobs, but instead the data showed an INCREASE of 2.509 million jobs. Two factors were likely at play here:

  1. The PPP loan was effective in incentivizing businesses to re-hire to qualify.
  2. Companies laid-off too many employees in March and April (both of these months unemployment claims were revised down).

Where do we go from here? The May report, although positive, is still too early to get an idea of how reopening the economy has affected employment. June’s employment report (and subsequent months) will be a better indicator of how the reopening of the economy is translating to re-hiring. Have any business owners utilized their PPP to hire back workers in May?