The US labor market isn’t ready to slow down just yet.
Employers added 339,000 jobs in May, according to the monthly employment report from the Bureau of Labor Statistics released on Friday.
That’s an acceleration from April’s job gains, which were revised upwardly to 294,000, and it’s a far hotter number than the 190,000 jobs that economists were expecting.
“Overall, the [jobs report and broader economic] data continues to show an economy that’s certainly not in a recessionary mode and perhaps is growing at a healthy pace,” Preston Caldwell, chief US economist at Morningstar, told CNN.
However, the sizable jump in the unemployment rate was also a surprise, rising to 3.7% from 3.4%. Economists polled by Refinitiv had expected it to edge up by only a percentage point.
The surge in the jobless rate — the largest monthly leap since the early days of the pandemic and, before that, November 2011 — was driven by people who lost their jobs permanently and those who completed a temporary job, BLS data shows. The labor force participation rate held steady in May at 62.6%, while the prime age participation rate, for workers between the ages of 25 and 54, rose to 83.4%, which is the highest since January 2007.
That data also shows that it may be taking longer for people to find work: The number of people unemployed for 15 to 26 weeks jumped by 179,000 to 858,000.
Wage growth cooled slightly, with average hourly earnings growing 0.3% the month before and 4.3% over the prior year. Those are respectively down from 0.4% and 4.4% in April.
“As employment reports go, this one was more of a mixed bag,” Mark Hamrick, senior economic analyst for Bankrate, wrote Friday.
Broad job growth
The balmy May jobs report caps off a week of equally toasty labor market data. Job openings bucked a three-month downward trend, climbing back over the 10 million mark; private sector payroll growth blew past expectations for a sharp cooldown; and initial weekly unemployment claims didn’t really budge.
The US economy hasn’t experienced a month of job losses since December 2020, when Covid infections were experiencing a spike.
The May job gains were broad-based, with some of the largest increases seen in professional and business services, government, health care and leisure and hospitality. Construction as well as transportation and warehousing also saw job growth.
“The big jobs numbers come from an economy still rebuilding fundamental services and industries damaged by Covid three years ago,” Robert Frick, economist with Navy Federal Credit Union, said in a statement. “Health care is still hurting for workers after a mass exodus from that profession, and now we continue to see workers returning to that work en masse. We see the same pattern with government and construction jobs.”
Through the first five months of 2023, job growth has averaged 312,000 positions a month. While that’s a pullback from the average monthly net gains of 399,000 jobs and 605,000 jobs seen in 2022 and 2021, respectively, this year’s job growth remains elevated from pre-pandemic times: There were 163,000 jobs added per month in 2019, BLS data shows.