The US economy added 390,000 jobs in May, better than expected, despite fears of a slowdown in the economy and high inflation, the Bureau of Labor Statistics said on Friday.
At the same time, the unemployment rate remained at 3.6%, slightly above the December 1969 low.
Economists surveyed by Dow Jones were looking for non-agricultural wages to increase by 328,000 and the unemployment rate to fall to 3.5%.
“Despite the slight cooling, the tight labor market is clearly holding back and dispelling fears of a downturn,” said Daniel Zhao, senior economist at Glassdoor. “We continue to see signs of a healthy and competitive labor market, with no signs of braking.
The average hourly wage increased by 0.3% compared to April, slightly lower than the estimate of 0.4%. The 5.2% increase in wages compared to the previous year was in line with expectations.
Stock market futures were volatile, pointing to lower Wall Street opening after the report. Government bond yields rose.
Job gains were widespread. Leisure and hospitality lead, adding 84,000 positions. Professional and business services increased by 75,000, transport and warehousing contributed by 47,000, and construction jobs increased by 36,000.
Other areas that made significant gains included public education (36,000), private education (33,000), health (28,000), manufacturing (18,000) and wholesale (14,000).
However, retailers hit the month, losing 61,000 in May, although the BLS noted that the sector remained 159,000 above its February 2020 level before the pandemic.
“This is not really in line with a consumer who wants to spend on goods,” said Drew Matus, chief market strategist at MetLife Investment Management, for retail figures. “The history of accommodation and food services tells you that people have gone from spending on goods to spending on services. The real question is how long they will last.
Despite the increase in jobs, a survey of BLS households showed that the labor market has not yet regained all the positions lost during the pandemic. Total employment remains 440,000 below pre-Covid levels.
Labor force participation has risen to 62.3%, although it is still 1.1 percentage points below February 2020, as the workforce is 207,000 less than that.
A more comprehensive unemployment measure, which takes into account those who are not looking for work and those who are in part-time positions for economic reasons, rose to 7.1%, more than a tenth of a percentage point compared to April. Unemployment among Asians fell to 2.4%, the lowest in nearly three years, while among blacks it was 6.2%, an increase of 0.3 percentage points.
Revisions to job estimates in March and April reduced previously reported amounts by 22,000.
Matus said the market reaction probably indicates that investors expect more increases in Federal Reserve interest rates and a slowdown in the labor market. Fed officials say they are seeking to return the picture of jobs to balance the current high demand and low supply of labor.
“I wouldn’t call it a lull before the storm, but it could be the last part of the sunlight before the clouds get a little deeper and darker,” Matus said.
The report comes amid fears that higher inflation, along with geopolitical developments, including the war in Ukraine and Covid’s restrictions in China, could affect the US economy, which shrank by 1.5% in the first quarter.
Although there are recent signs that inflation may be slowing, the current rate is still around the fastest in 40 years. The prices of the pump are at historically the highest values, with a gallon of ordinary unleaded at a price of $ 4.76, which is 13% more than a month ago and more than 56% more than a year ago, according to AAA.
This comes with a slowing economy, which is currently on track to grow by only 1.3% in the second quarter, according to the Federal Reserve.
In an attempt to control inflation, the Fed is trying to slow the economy with a series of interest rate hikes. Fed Governor Lael Brainard told CNBC on Thursday that he expects further increases in the coming months until inflation is reduced to a 2% central bank target.
Business is hampered in the current environment, not least by a shortage of workers, which has left almost two jobs for every worker available. A Fed report earlier this week said businesses were growing concerned about the future – eight of the 12 central bank districts reported slowing growth, while four explicitly cited fears of a recession.
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