WASHINGTON–The just-released May jobs report shows growth in “all the right ways” according to a credit union economist.
The Bureau of Labor Statistics reported the U.S. economy added 390,000 jobs in May, which was stronger than many economists had forecast. At the same time, the unemployment rate held at 3.6%, just above the lowest level since December 1969.
“The May jobs report was a strong one in all the right ways. Job growth exceeded expectations and labor force participation continued to improve,” said NAFCU Chief Economist and Vice President of Research Curt Long. “Wage gains were decent but more modest than a year ago, bringing the year-over-year gain down to its lowest level since December. Overall, this report should stem recessionary concerns and provides the Fed with more leeway to achieve a soft landing for the economy. Credit unions maintain a cautious, yet optimistic attitude to keep their members equipped with the tools to meet economic challenges."
According to the new employment report, job gains were broad-based, with the leisure and hospitality industries leading the way by adding 84,000 positions. Professional and business services rose by 75,000, transportation and warehousing contributed 47,000, and construction jobs increased by 36,000, the government said.
“Nonfarm employment increased in May, continuing large gains from previous months. The unemployment rate remains much closer to a pre-pandemic rate of 3.6%, which indicates strong consumer demand for goods and services despite the Federal Reserve starting to tighten its monetary policy," said CUNA Senior Economist Dawit Kebede. "Labor force participation has increased slightly by 330,000 in May, but it is still significantly lower than pre-pandemic levels. The labor demand and supply imbalance is still a concern, particularly in areas where there are more vacant jobs available than unemployed people.
“The rate of hourly wage increase slowed down to an annualized rate of 3.6% in the previous two months," Kebede continued. "This lowers the inflationary pressure that could possibly come from a continued wage increase in a low labor supply environment and it reduces the probability of a wage-inflation spiral.”
Other Gaines (and 1 Loss)
Other areas that saw notable gains included state government education (36,000), private education (33,000), health care (28,000), manufacturing (18,000) and wholesale trade (14,000), the data show.
One category that lost jobs was retail trade, which was down 61,000 positions in May, although the Bureau of Labor Statistics noted the category remains 159,000 above its February 2020 pre-pandemic level.
"That's not really consistent with a consumer that's itching to spend on goods," Drew Matus, chief market strategist at MetLife Investment Management, said of the retail numbers. "The accommodation and food services story is telling you people have shifted from goods spending to services spending. The real question is how long will they sustain that."
Over BLS household survey reveals the labor market has not yet recovered all the positions lost during the pandemic, with total employment approximately 440,000 below the level prior to the pandemic.
Other Data Points
Other data released by the government show:
- The labor force participation rate rose a bit to 62.3%, which is still smaller by 207,000 jobs from where it stood in early 2020.
- A measure that shows those not looking for jobs and those holding part-time positions for economic reasons moved higher to 7.1%, up one-tenth of a percentage point from April.
- Revisions to the March and April job estimates took 22,000 off the previously reported totals.