Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
The May employment report is out, and here are the headlines:
- Employers added 390,000 workers last month, higher than the 328,000 expected.
- While this was the fewest jobs added since April 2021, it’s still a very good number, especially with inflation raging on.
- Employment is just 0.5% lower than before the pandemic.
- Leisure and hospitality (+84,000) and professional and business services (+75,000) posted the biggest job gains last month.
- Retail trade (-61,000) lost the most jobs in May, but its employment is still 159,000 higher than February 2020.
- The unemployment rate remained at 3.6% for the third straight month.
- Average hourly earnings rose 0.3% in May, and are 5.2% higher than a year ago.
- The labor force participation rate—the percentage of working-age Americans either working or looking for work— rose to 62.3%.
So, this is a pretty good report, especially after ADP’s May survey showed private-sector payrolls increasing just 128,000. Employers are hiring, theunemployment rate is holding near a record low, wages are rising, and more Americans are re-entering the workforce.
I wouldn’t be an economist if I didn’t point out at least one bit of disappointing news. While wages did rise 5.2% over the past year, that was down from 5.5% in April. While 5.2% is a good number, the 8.2% rate of inflation means a 3% pay cut for workers over the past year.
In other labor-market news, the number of job openings fell by 455,000 in April, but at 11.4 million it’s still almost double the number of unemployed workers in the U.S. We also found out yesterday that initial jobless claims fell by 11,000 last week, while continuing claims for unemployment dropped to their lowest level since 1969.
The labor market remains as strong as it’s ever been, and the biggest reason to be optimistic that a recession can be avoided as the Fed continues to bring rates higher.