Hiring surges as US employers add 339,000 jobs
Kevin Lessmiller
(CN) — Undeterred by the Federal Reserve’s campaign to slow down the economy, American employers added a remarkably strong 339,000 jobs in May.
The unemployment rate, meanwhile, rose from a half-century low of 3.4% to 3.7%, according to a Labor Department report released Friday morning.
Last month’s payroll growth came in well above the Dow Jones prediction of 190,000 new jobs. Gains for April and March were also revised up by 41,000 and 52,000, respectively.
The better-than-expected jobs report will weigh on the Federal Reserve as the central bank decides whether to raise interest rates for the 11th time in a row when it meets later this month. The Fed has been aggressively trying to cool down the economy in an effort to tame inflation, which hit a four-decade high last year.
Paul Ashworth, chief North America economist at Capital Economics, said that despite the hiring surge last month, Friday’s report wasn’t all good news. He pointed to the unemployment rate rising 0.3% due to 110,000 more people entering the labor force, as well as average weekly hours dropping to a three-year low of 34.3.
Still, Ashworth noted that wage growth pressure is easing, which is a good sign for tackling inflation.
“Despite a 0.3% [month-over-month] increase in May, the annual rate of average hourly earnings growth dropped back to 4.3%, from 4.4%. As a result, the Fed can still afford to skip a rate hike in June,” he wrote.
Total job gains last month were almost exactly in line with the 12-month average of 341,000.
Professional and business services led the way in hiring with 64,000 positions, following a similar increase in April. Health care came in second, adding 52,000 jobs in May.
There were 48,000 more jobs in leisure and hospitality, including 33,000 at restaurants and bars. But despite averaging 77,000 new jobs a month for the past year, the industry is still down 349,000 compared to its pre-pandemic level in February 2020.
Construction companies added 25,000 jobs, followed closely by 24,000 in transportation and warehousing. Social assistance payrolls similarly rose by 22,000 last month.
In the public sector, local governments across the country added 30,000 positions, including 14,600 in education. State governments added 19,000 jobs in May, with 7,000 more at the federal level.
Nick Bunker, economic research director for North America at career site Indeed, said the biggest concern with the latest jobs report is the jump in unemployment.
“Almost half of the increase in the number of unemployed workers was due to a spike in Black unemployment. This might be statistical noise, or it could be a sign of Black workers disproportionately bearing the brunt of a rise in joblessness,” he wrote.
Bunker also pointed to the decline in average weekly hours worked as a potential sign of trouble, noting it is a traditional indicator of a recession.
“The two sides of this report are telling different stories,” he said. “Most other data shows a labor market with high levels of demand for workers. Hopefully, the concerning signs in this report are one-month aberrations. But unfortunately, we can’t know that for sure.”
President Joe Biden took a victory lap in a statement Friday morning, saying over 13 million jobs have been created since he took office in January 2021.
“In short, the Biden economic plan is working. And due to the historic action taken by Congress this week, my economic plan will continue to deliver good jobs for the American people in communities throughout the country,” the president said, referring to a bipartisan deal to raise the debt ceiling.