The latest report from the Bureau of Labor Statistics indicates that the job market recovery continues despite fears of a slowdown. The unemployment rate held steady and is just slightly higher than the 50-year low rate the economy saw before the COVID-19 pandemic. With low levels of unemployment, job growth has moderated in recent months but remains strong. Recent actions by the Federal Reserve to curb rising prices do not appear to have significantly impacted hiring.jobget_unemployment_report_may-converted__2_ (1)
The economy added 390,000 jobs in May, higher than forecasted. The BLS revised March’s job growth down to 398,000 and April’s job growth upward to 436,000, resulting in job gains that are 22,000 less than reported previously. While job growth has cooled compared to prior months, job gains continue to be much higher than typical gains before the pandemic. The unemployment rate held steady at the pandemic low of 3.6%, just below the pre-pandemic rate of 3.5%.
Once again, the biggest job gains for the month were in the Leisure and Hospitality sector. Leisure and Hospitality added 84,000 jobs, accounting for over one-fifth of total job gains. Hiring in restaurants and bars continued to lead the way in Leisure and Hospitality hiring, accounting for 55% of job growth (56%) in the industry. Professional and Business Services and Transportation and Warehousing also had strong job gains for the month.
Average hourly wages increased by 0.31% in May, matching April’s increase, or 5.2% on a year-over-year basis. This increase is both too high—rising wages are fueling inflation and are not sustainable—and too low to keep pace with inflation.
The labor force increased by 330,000 workers in May after losing workers the month prior. This increase nudged the labor force participation rate upward, but it still remains more than a full percentage point lower than the pre-pandemic level.
The total number of unemployed individuals was essentially unchanged from April at 6 million. The number of people on temporary layoffs fell slightly while the number of permanent job losers held steady at 1.39 million. The number of long-term unemployed dropped to 1.36 million. Long-term unemployed individuals accounted for 23% of all unemployed workers in May. The median unemployment duration increased to 9.6 weeks from 7.5 weeks in April.
The overall unemployment rate held steady for the third month in a row at the pandemic low of 3.6%. When broken down by demographic group, the unemployment rate dropped significantly for Asians while showing little or no change for other groups.
Compared to May 2021, unemployment rates are lower across the board for every major occupation group. Among service, sales & office, natural resources, construction and maintenance, and transportation and material moving occupations, unemployment rates are 1.8 to 3.9 percentage points lower than rates from May 2021. Unemployment rates for these occupations categories are currently between 3.6% and 5%.
Leisure and Hospitality continued to lead in job growth, adding a total of 84,000 jobs, 46,000 of which were in restaurants and bars. Professional and Business Services and Transportation and Warehousing added a combined 122,000 jobs while Government, Healthcare and Social Assistance, and Construction also had strong hiring, adding a combined total of 135,100 jobs.
For the second month in a row, average hourly wages increased by 0.31% or 5.2% on an annual basis. While strong, wages are not increasing by as much as in prior months, and growth is not enough to keep pace with inflation, which currently stands at 8.3% on a year-over-year basis. Average hourly wages in Information increased by $0.34 from April, while Mining and Logging and Transportation and Warehousing also had significant wage increases.
As the economy added 390,000 jobs, the labor force grew by 330,000 workers. The addition of these workers nudged up the labor force participation rate to 62.3%, just below the pandemic high of 62.4%, but still more than a full percentage point below the pre-pandemic level of 63.4%. Workers are being lured back to the labor force by rising wages and near-record levels of vacancies.
The labor force participation rate among workers aged 25 to 54 increased from 82.4% in April to 82.6% in May. Leading this group were Black workers, who saw their prime-age labor force participation rate increase to 81.2%, the highest since 2005.
There were 11.4 million job openings in April, just slightly less than the record level set in March. The rate of job openings relative to the labor force is 7%, far higher than rates seen before the pandemic. For every unemployed worker, there are nearly 2 job openings. Labor demand continues to be very strong, and layoffs are also at a record low.
The labor force continues to recover, even as the Federal Reserve has raised interest rates to combat inflation. The Fed would like to see a cooling off of the economy, with dampened job and wage growth. However, the strong numbers from May will likely signal to the Fed that further interest rate hikes are in order.
While recent employment gains are less than in earlier months, the May jobs report from the Bureau of Labor Statistics shows that the job market recovery continues despite fears of a slowdown. The job market remains very tight even as the labor force participation rate inched upwards. At the same time, wage gains have moderated slightly, but they are still high—although less than the pace of inflation. Near record-high levels of job openings and record low levels of layoffs indicate that the job market still very much belongs to workers and job seekers.
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