The Bureau of Labor Statistics reported Friday that the US economy added 390,000 jobs in May, better than expected despite fears of an economic slowdown and a sharper pace of inflation.
At the same time, the unemployment rate remained at 3.6 percent, just above the lowest level since December 1969.
Economists surveyed by Dow Jones were looking for non-farm payrolls to expand to 328,000 and the unemployment rate to drop to 3.5%. May’s total represented a pullback from the upside correction 436,000 in April and was the lowest monthly gain since April 2021.
“Despite the slight chill, the tight labor market is clearly sticking around and fueling fears of a recession,” said Daniel Zhao, senior economist at Glassdoor. “We continue to see signs of a healthy and competitive job market with no signs of stepping on the brakes just yet.”
Average hourly earnings rose 0.3% from April, slightly less than the 0.4% estimate. Year-over-year growth was in line with expectations for wages of 5.2%.
Stock market futures were volatile and pointed to a lower open on Wall Street after the report. Government bond yields rose higher.
Job benefits were broad-based. Led Leisure and Hospitality, adding 84,000 positions. Business and business services increased by 75,000, transportation and warehousing contributed 47,000, and construction operations increased by 36,000.
Other sectors that made significant gains include state government education (36,000), private education (33,000), health care (28,000), manufacturing (18,000) and wholesale trade (14,000).
Retail trading took a hit in the month, however, with a loss of 61,000 in May, although the BLS noted that the area remained at 159,000 above the February 2020 pre-pandemic level.
Drew Mattus, chief market strategist at MetLife Investment Management, said of the retail numbers, “It doesn’t really suit the consumer who’s itching to spend on goods.” “The story of housing and food services is telling you that people have shifted from goods spending to services spending. The real question is how long will they keep it up.”
Despite jobs being found, the BLS household survey showed that the labor market has yet to recover all positions lost during the pandemic. Total employment is 440,000 below the pre-covid level.
Labor force participation rose to 62.3%, though still down 1.1 percentage points from February 2020, as the labor force is 207,000 less than that mark.
A more comprehensive measure of unemployment that takes into account those not looking for jobs and those in part-time positions for economic reasons rose by a tenth of a percentage point from April to 7.1%. Unemployment for Asians fell to 2.4%, the lowest in nearly three years, while the rate for blacks was 6.2%, an increase of 0.3 percent.
The revision in job estimates for March and April shaved 22,000 from the previously reported total.
Matus said the market reaction may indicate that investors are anticipating further hikes in the Federal Reserve’s interest rates and a slowdown in the jobs market. Fed officials have said they want to bring the jobs picture back into balance from the current high demand and low labor supply.
“I wouldn’t call it the calm before the storm, but it could be the last bit of sunlight before the clouds get a little darker and darker,” Matas said.
The report comes amid fears that high inflation as well as geopolitical developments are involved war in ukraine And covid Sanctions in China could hit the US economy which contracted by 1.5% in the first quarter.
Although there have recently been signs that inflation may be slowing, the current pace is still the fastest in 40 years. Prices at the pump are notably at historic highs, according to AAA, with a gallon of regularly unleaded at $4.76, up 13% from a month ago and up 56% from a year ago.
According to the Federal Reserve, it is coming to terms with a slowing economy that is currently on track to grow at just 1.3% in the second quarter.
In an effort to control inflation, the Fed is trying to slow the economy with a series of interest rate hikes. Fed Governor Lyle Brainard told CNBC on Thursday That it expects further growth in the coming months until inflation hits the central bank’s 2% target.
Businesses have been disrupted in the current environment, not least by labor shortages, which have left about two job opportunities for every available worker. A Fed report earlier this week said businesses are expressing growing concerns about future prospects – eight of the central bank’s 12 districts reported slow growth, while four notably slowed down. apprehensions cited.