The US economy added 559,000 jobs in May and the unemployment rate dropped to 5.8 percent, the Labor Department said Friday, as Covid-19 vaccines helped businesses reopen and rehire.

While last month's employment gains were weaker than the consensus estimate, the monthly report contained evidence the economy was recovering from the mass layoffs caused by the pandemic, with the number of long-term unemployed declining 431,000 to a still-high 3.8 million.

However, the economy is still short 7.6 million jobs compared to February 2020, before the pandemic struck, the report said.

Sectors that were badly damaged by business restrictions to stop the virus made up the bulk of the employment gains last month, with the leisure and hospitality sector adding 292,000 jobs, two-thirds of which were in businesses like bars and restaurants.

While the US economy is still short 7.6 million jobs compared to the pre-pandemic level, the hardest hit sectors are rehiring
While the US economy is still short 7.6 million jobs compared to the pre-pandemic level, the hardest hit sectors are rehiring AFP / JEFF KOWALSKY

Accommodations added 35,000 jobs, and amusement, gambling and recreation businesses added 58,000, but the leisure and hospitality sector is still short 2.5 million positions compared to February 2020, the report said.

And average hourly wages increased strongly, rising 15 cents to $30.33 after a 21 cent gain in April, which the Labor Department attributed to firms trying to attract unemployed workers back to the job.

"The data for the last two months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages," the report said, noting that the pandemic's employment disruptions "complicate the analysis" of wage trends.

The Labor Department also revised the gains for previous months slightly upwards, with March hiring reported at 785,000 and April revised to 278,000, a net increase of 27,000 for the two months.

Coronavirus