The unemployment rate dropped to 5.8% last month as states open back up.

We were looking for some “bounce-back” numbers in the employment report last Friday. We believed that the stage was set with the progress of our vaccination program having a real effect on the number of COVID cases in our country.  As of the middle of May, cases had dropped approximately 90% from the peak of early this year.

As the cases dropped, our economy continues to open.  States are relaxing restrictions and there are signs of life everywhere—from restaurants to traffic on the road. Therefore, most economists are counting on a robust recovery this year, especially in the second quarter which is now coming to a close.  But the recovery does not happen unless America goes back to work.

So how did we do?  The increase of 559,000 jobs was less than expected, but a pick-up from last month.  In addition, the previous two months were revised upward by 27,000 jobs. The headline number is the unemployment rate, which moved down to 5.8%.   Keep in mind that we can add a lot of jobs without moving that number significantly, as the labor participation rate increases. In this case, the participation rate came in at 61.6%, little changed from the previous month, which means there is still plenty of slack to take up within the recovery.  Was it a bounce back month? Absolutely, but not as strong as some expected.