Welcome to our monthly video series on the jobs reports featuring our Chief Economist Sania Khan and Senior Director, Product Marketing, Jason Cerrato. Every Friday morning after the reports are released, grab a cup of coffee and join them for the latest on the jobs numbers.
The latest unemployment report for May has delivered a positive surprise, showcasing robust job growth that exceeded expectations.
According to the report, the US economy added 339,000 jobs, marking the 29th consecutive month of job expansion and representing the highest increase since January. Furthermore, the figures from the previous two months were revised upwards by approximately 93,000 jobs.
However, when examining the household survey portion of the report, a different narrative emerges. Despite an unchanged labor force participation rate, the unemployment rate experienced an unexpected jump from 3.5% to 3.7%. Additionally, the number of hours worked registered a 0.3% decline, returning to pre-pandemic levels. Moreover, the number of individuals not actively participating in the labor force rose by nearly 400,000.
“It’s still a tough market to hire,” Khan said. “Across the board, from small businesses to medium to large businesses, it’s a difficult time for businesses to hire the qualified talent. We’re seeing job openings increase overall, and hiring is roughly the same as it was in the previous few months. It’s still a hard time to find the right people for the right job.”.
Despite the presence of higher inflation, interest rates, and an impending recession later this year, the overall labor market continues to exhibit resilience. In April, job openings surged to 10.1 million, indicating that employers are still encountering challenges in filling vacant positions. This demonstrates that the labor market remains robust, defying external pressures.
“Just yesterday, I was talking with an organization and their talent leaders about a triangle of effects,” Cerrato said. “There’s competition for specific skill sets and talent, and at the same time their industry is pivoting and potentially finding new ways to deliver to customers. Then they’re dealing with the economic uncertainty of a potential recession, with restrictions and limitations on headcount and all these things. It hit me that we’re seeing all three of those factors play out in the jobs report this morning.”
Here are some key takeaways from the reports:
- Noteworthy sectors that witnessed significant growth included professional and business services (+64,000), followed by the government sector (+56,000), and healthcare (+52,000).
- Wage growth remained robust, increasing by 4.3% over the year. This marked a slowdown compared to the 4.4% growth observed in April. On a monthly basis, average hourly earnings rose by 0.3%
- The April Job Openings and Labor Turnover Survey (JOLTS) report revealed an overall increase in job openings from 9.7 million to 10.1 million over the month. However, in the private sector, job openings still remain 14% below the levels observed a year ago.
- As of March, there were 1.6 job openings per unemployed worker, down from over two per employed worker compared to the previous year.
- The arts, entertainment, and recreation industry demonstrated the highest rate of job openings, which is consistent with the seasonal surge in hiring for the summer period.