Job gains maintained impressive growth in May, even as government politicians took steps to cool the economy and ease inflation.
The labor ministry said on Friday that employers had added 390,000 jobs, the 17th consecutive monthly profit.
The unemployment rate is 3.6 percent for the third month in a row, close to the lowest level in half a century. Average hourly wages of employees increased by 10 cents, or 0.3% on a monthly basis, and were 5.2% higher than a year earlier.
Job growth was broad and driven by the leisure and hospitality sector as consumers continued to shift their spending habits to services such as travel, dining and entertainment.
The deficit in total employment compared to pre-pandemic levels is about 800,000.
“Here we are at the beginning – we may be about two months away from the level of employment we had before the pandemic in February 2020,” said Andrew Flowers, a labor economist at Appcast, a company that helps companies target their online recruitment efforts.
Record levels of consumer spending, which make up about 70 percent of the economy, have led to business expansion and job creation as companies try to cope with the demand for a wide variety of goods and services. Pressure hiring has given some workers a degree of freedom in terms of pay and conditions that are unknown to both jobseekers and employers.
But the Federal Reserve is worried that rising labor costs will be passed on to consumers, limiting efforts to reduce inflation, which is nearing a 40-year high.
Last month, Fed Chairman Jerome H. Powell stressed that his institution’s attempts to cool prices are part of providing a more sustainable form of full employment. “We need to return to price stability so that we can have a labor market where people’s wages are not eaten away by inflation,” he said. “And where can we have a long expansion?”
During the year, rising prices and general instability in the economy created a dissonance between acidic consumer sentiment and relatively positive raw data. Current accounts are still above 2019 levels for almost all income groups. And the number of households forced into debt as a result of debt burdens is historically low. New bankruptcies and debt collection procedures are at their lowest level since the beginning of the follow-up in 1999.
For some economists, Friday’s report is early evidence that the Fed’s ambitious plan to design a moderate economic slowdown that avoids a painful recession can be achieved. The labor ministry said on Wednesday that layoffs were at a record low. But it also showed that the big gap between job vacancies and jobseekers has narrowed.
“Businesses with high profitability, easy access to capital, automation capacity and pricing are still eager to hire,” said Bill Adams, chief economist at Comerica Bank, a large commercial bank based in Texas. “But companies that see their margins being squeezed by rising costs, such as hospitality, or those that see demand easing, such as retail, are pulling out job ads as their prospects diminish. And competition for workers is pushing lower-paid employers out of the labor market. “
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