What to Make of the Rebound in the U.S. Jobs Report

Even if they didn’t anticipate the May rebound, many economists had expected that unemployment would begin to ease as states reopened and businesses called employees back to work.

More than half of the month’s job gains — 1.4 million — were in restaurants and bars, many of which received assistance under the government’s Paycheck Protection Program. Friday’s report suggests that program, along with other elements of the government’s response, helped offset at least some of the economic damage caused by the shutdown, which should allow for a faster rebound.

“The economy is still being very much buffered by stimulus,” said Michelle Meyer, head of U.S. economics at Bank of America. “When that starts to wane we will learn a lot more about the underlying health of the recovery.”

[How do you feel about going back to work? Share your story.]

At Beef ‘O’ Brady’s, a Florida-based chain of more than 150 sports bars, business was down 62 percent in April, when its dining rooms were closed nationwide and its only business came from takeout. But only a handful of the chain’s restaurants have closed permanently, in part because nearly all of its franchisees received Paycheck Protection loans.

“The damage would have been much greater without PPP, I can tell you that,” said Chris Elliott, the chief executive.

Now business has begun to pick up as states gradually allow restaurants to reopen. In the last week of May, sales were down about 15 percent, Mr. Elliott said, and customers appear eager to eat out again.

Still, the longer-run outlook is uncertain. If business stays at its current level, many franchisees will struggle to eke out a profit, he said, and at half the locations, sales are still down more than 50 percent. That won’t be sustainable for long.

Source Article