News from the U.S. labor market has been unprecedentedly grim since the new coronavirus unleashed its fury across the country in March, and is likely to remain so when May unemployment figures are released on Friday, Bank of America Global Research said in a new report.
“By our analysis, nonfarm payrolls will likely contract by 8.0 million jobs in May and the unemployment rate should climb to 19%,” the bank’s economists wrote.
BofA arrived at those figures by collecting employment data from 13 states, and then extrapolating the percent change in cumulative initial claims for each industry during the relevant weeks for the April and May jobs reports, applying that to April payroll growth, and then scaling to arrive at its total nonfarm payroll forecast.
The 13 states in the analysis are Alabama, Iowa, Idaho, Kansas, Louisiana, Massachusetts, Nebraska, Nevada, New York, North Dakota, Oregon, Rhode Island and Washington.
BofA’s outlook for a recovery? Notwithstanding optimistic consumer expectations, it said uncertainty about several factors suggest a grimmer reality: A vaccine for the virus is not in the immediate or even medium-term future, and a possible second wave of the virus may strike as the economy reopens, slowing recovery.
BofA also cited a recent paper, which argued that two in five jobs lost to the COVID-19 shock would never return.
See the gallery for the 12 sectors BofA predicts will have the biggest job losses in May.
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