Despite economic headwinds, job gains beat expectations in May
The U.S. labor market added 172,000 jobs in May, leaving the unemployment rate unchanged at 4.3%, the U.S. Bureau of Labor Statistics reported Friday. The number of unemployed people changed little at 7.3 million.
Friday’s report was significantly better than most economists expected and provided a hopeful sign that the American labor market remains solid, despite lackluster hiring in recent months and an oil shock that has rattled the global economy.
“The labor market is improving,” wrote Diane Swonk, chief economist at KPMG, in a note shared with Straight Arrow, “despite some undercurrents for the long-term unemployed and new [college] grads.”
The economy gained jobs in leisure and hospitality, local government and health care. Meanwhile, financial activities jobs declined.
Friday’s report revealed that average hourly earnings rose 0.3% in May, but that still leaves wage gains nearly a full percentage point below the current U.S. inflation rate.
Swonk noted that job gains in May varied widely by income strata, which she said is adding to political polarization ahead of the election.
“High-income households continue to take vacations and step out,” she wrote, “which is adding to service sector inflation.”
Job openings hit a nearly two-year high
The number of U.S. job openings increased to 7.6 million in April, the highest in nearly two years, according to a separate report released Tuesday by the Labor Department.
Data from the monthly Job Openings and Labor Turnover Survey, known as JOLTS, showed that job openings increased in professional and business services, but decreased in finance and insurance.
The bad news, however, is that companies hired 5.1 million people in April, a decrease of 419,000 from the month prior. Also, the overall layoff rate rose slightly to 1.3% in April, from 1.2% in March, which is still low by past standards.
In a report shared with Straight Arrow, economists with Pantheon Macroeconomics expressed skepticism that the increase in job openings is a reliable signal that labor demand is picking up. They noted that other measures show demand slipping and that the initial JOLTS figures are frequently revised down when more data comes in.
They also said the numbers show that workers seem less willing to take a risk by moving to another job, most likely due to low confidence in this job market.
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Ella Rae Greene, Editor In Chief
