The U.S. healthcare sector added 312,400 jobs in May, bouncing back from the over 1.4 million job losses the sector suffered in April due to the effects of the coronavirus pandemic.
Dentists' practices saw the greatest rebound in the month, with 244,800 jobs added, according to a June 5 report from the U.S. Bureau of Labor Statistics. Offices of other health practitioners and physicians followed, posting gains of 73,100 and 51,300, respectively.
While the substantial losses seen in April were expected to somewhat level off in May and June, the May BLS report was "absolutely unexpected in healthcare and in the broader economy," Dante DeAntonio, an economist at Moody's Analytics, said in an interview.
"We certainly weren't, and the consensus certainly was not, expecting job gains in any sense in May," DeAntonio said. "We were expecting a few million more jobs to be lost based on what we were seeing with jobless claims and other information that was available."
April's total job loss for healthcare — which was primarily attributable to the significant drop off in nonemergent and elective care — was revised up slightly from about 1.44 million to 1.48 million, according to the report.
The U.S. employment situation had a surprise turnaround in May after the pandemic devastated multiple industries and led to the highest jump in the unemployment rate since January 1948, when seasonally adjusted data was first available. Overall, non-farm payroll increased by 2.5 million in May and the unemployment rate dropped from 14.7% to 13.3%.
Despite the quick rebound seen across healthcare and other industries, DeAntonio cautioned against using May's report as a signal that the economy is heading back to pre-pandemic levels.
"It's unclear what this positive number in May means right now. It could be partially artificial as a result of [the Paycheck Protection Program]," DeAntonio said. "We really need to see a few more months of sustained job gains before we get too excited about the trajectory that we're on."
The novel coronavirus has infected at least 1,885,197 people in the U.S., leading to 108,708 deaths, according to a tracker from Johns Hopkins University's Center for Systems Science and Engineering.
Continued losses for some subindustries
While offices of dentists and physicians were among the healthcare subindustries that saw gains in May, hospitals and nursing and residential facilities experienced further losses in the month.
Hospitals lost 26,700 jobs in May, nursing care facilities lost 18,000 jobs and residential mental health facilities jobs fell by 10,800, according to the BLS data. Jobs for community care facilities for the elderly also declined by 8,300.
Dentists and physicians likely saw such a dramatic reversal because those were subindustries that suffered the most in April as states implemented social distancing measures and elective care declined, DeAntonio said. He added that it will most likely be a slower recovery for hospitals.
"Elective procedures and hospitals will probably be slower to come back online, just given the extra precautions that hospitals are having to take. Whereas separate offices for physicians and dentists, I think, are much more able to flip the switch back on," DeAntonio said.
The cancellation of non-emergent and elective care has had a dramatic effect on the hospital industry, both in job and financial losses. Hospital jobs declined by 127,100 in April, and top for-profit hospital companies in the U.S. all reported sharp patient and procedure volume declines at the end of the first quarter and continuing into the second.
In a survey of 30 U.S. hospital administrators, over 80% of respondents said 61% to 90% of all elective care was postponed as the pandemic took hold, with 57% of respondents reporting that 81% to 90% of elective care was postponed, according to a June 5 report from Cowen. The report stated that 90% of administrators had shut down elective care by the end of March.
Furthermore, 31% of respondents do not expect procedures to return to near pre-pandemic volumes until the end of 2020, and 21% of respondents said 91% to 100% of procedure volumes would not return before the end of 2021, according to the report.
After a quick initial rebound as patients seek care and states re-open, job levels for the healthcare sector will likely plateau or even decline a bit in 2020 and 2021, and a full recovery may not happen until 2022, according to DeAntonio.
"Even though we get a lot of it back right away, getting that last little bit back will take much longer," he said.
A possible resurgence of the pandemic and spike in patients infected by the virus later in 2020 could also impact the labor market.
A likely scenario is that hot spots will be mitigated by increased testing and contact tracing capacities, according to DeAntonio. However, an uncontained resurgence could hit the economy even more severely as businesses are still recovering and in worse financial positions than when the pandemic first hit.
"If we get to a point where we have to mandate business closures again for a second time after states have reopened, I think that does bigger, more lasting damage than the first shutdown did," DeAntonio said.