The stock market’s recovery after the crash in March has been fueled largely by trillions of dollars of stimulus and support efforts. The economic recession has spewed atrocious economic reports for the past 60 to 75 days, but ADP’s call this week is that the peak of the jobs decline was seen in April.

The Bureau of Labor Statistics (BLS) unemployment report released on Friday was perhaps so strong that hopes for additional stimulus packages might actually fade. It might even sound like the instant recession due to the COVID-19 panic may have ended. That said, the report also contained some serious exceptions, and some data appeared to be missing due to the COVID-19 pandemic changes.

May’s unemployment rate actually fell to 13.3% and the nonfarm payrolls rose by 2.5 million. The Econoday estimates had called for the official unemployment rate to rise to 19.8% and for nonfarm payrolls to fall by 7.725 million. April’s nonfarm payrolls report was revised to −20.7 million from −20.5 million.

The gain in private sector payrolls was 3.094 million in May. Econoday was calling for −6.5 million, and April’s preliminary report of −19.52 million was revised to −19.74 million.

As for those exceptions noted above, the “box note” at the end of the BLS report was much longer than usual as the BLS gave details to help explain the disparity of the report’s strengths versus the negative numbers that were expected.

The number of unemployed fell by 2.1 million to 21.0 million people in May. The total number of unemployed people is up by 9.8% (15.2 million) since the February report.

April’s gains of 16.2 million in the number of people who were on temporary layoff was down to 15.3 million in May. Also worth noting was that the number of those jobless for less for than five weeks fell by 10.4 million to just 3.9 million.

The long-term unemployment positions did not show the same strength. Those who were jobless for five to 14 weeks more than doubled (rising 7.8 million) to 14.8 million, and they account for about 70.8% of all unemployed people. The number of those who jobless for 27 weeks or longer rose by 225,000 to 1.2 million, and they represented 5.6% of the total unemployment population.

These labor market gains in May’s BLS reading reflected a limited resumption of economic activity, after having been curtailed in March and April. The BLS also showed that the snapbacks in employment were sharply higher in leisure and hospitality, construction, retail and education and health services. On the other hand, the total government jobs continued to decline sharply.

The labor force participation rate rose by 0.6% to 60.8% in May, after a 2.5% drop in April. The number of people who were employed part time for economic reasons was 10.6 million, little changed from April but up by a sharp 6.3 million since February’s pre-pandemic reports. The BLS also showed that the total number of people who are considered to be “not in the labor force who currently want a job” was down by 954,000 to 9.0 million in May, after having risen by 4.4 million people in April.

Most employment reports come with a box note of some sort, but the May BLS report almost resembles a drug label warning because there is so much data to consider. The bureau reported that data collection for both the household survey (individuals) and the establishment survey (businesses/orgs) was affected by the COVID-19 pandemic.

Regional data collection centers were closed, and about three-quarters of workers surveyed were working remotely. The BLS also noted that the establishment survey’s data collection rate of 69% was lower than pre-pandemic levels. Where it gets even more interesting is that the household survey was not handled in-person and by telephone interviews, but the personal interviews in May were not conducted “for the safety of interviewers and respondents.” The household survey response rate of 67% was about 15 percentage points lower than the pre-pandemic reports.

Many people were classified as unemployed on temporary layoff in May. The portion of the workforce classified as “employed but absent from work” also was large. And those classified as “employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff” were not all classified that way. The end of the report is technical and complicated, but it spells out just how far off the report May was:

If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis). However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.

If an investor or an economist were to look just at the polar opposite directional changes in the May unemployment report compared with expectations without thinking about it, the first thought would be that perhaps the report was full of errors or miscalculations. The other thought might be that the numbers were being fudged, which has been a longstanding accusation for multiple administrations in the past few decades.

The real issue here, which was not really addressed in the BLS report, was that the Payroll Protection Program loans from the Small Business Administration obviously played a very prominent role. It would have been almost impossible for forecasters to anticipate the real impact, as some workers being added back on to payrolls might have been in April or May, but many will not be added back on the payrolls until June.

After about 45 minutes of trading, the Dow was still up more than 700 points and was back just above the 27,000 level. The S&P 500 was up 67 points at 3,179.60, and the tech-heavy Nasdaq was up by 156 points at 9,771.95. The yield on the 10-year Treasury was up over 10 basis points at 0.92%, and the yield on the 30-year Treasury was up over 12 basis points to 1.75%.

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