The Bureau of Labor Statistics (BLS) recently released new reports that the American economy has added 390,000 new jobs during the month of May, despite the pandemic induced economic slowdown of the last two years and rising inflation. Estimates previously expected only 325,000 to 328,000 new payrolls for the month, with the unemployment rate lowered to 3.5 percent. With 65,000 jobs above estimates, and unemployment marginally higher at 3.6 percent – just above the lowest level since December 1969.
“Despite the slight cooldown, the tight labor market is clearly sticking around and is shrugging off fears of a downturn,” said Daniel Zhao, Glassdoor’s senior economist. “We continue to see signs of a healthy and competitive job market, with no signs of stepping on the brakes yet.” Average hourly earnings increased 0.3% from April, just under the projected 0.4 percent, with the year-over-year increase for wages of 5.2% which was in line with expectations. The BLS report noted, stock market futures were still volatile and pointed to a lower open on Wall Street, but government bond yields moved higher.
Leisure and hospitality, the most hard-hit sector by the COVID-19 pandemic, saw the most job gains, adding 84,000 positions. Professional and business services rose by 75,000, transportation and warehousing contributed 47,000, and construction jobs increased by 36,000. Other areas that saw notable gains included state government education (36,000), private education (33,000), health care (28,000), manufacturing (18,000) and wholesale trade (14,000). Retail trade, however, took a hit losing 61,000 jobs in May – the BLS did note that the sector remains 159,000 above its February 2020 pre-pandemic level. Despite these job gains, the BLS household survey reveals that the labor market has yet to recover all the positions lost during the pandemic. Total employment remains 440,000 below the pre-Covid level. While the BLS has not yet released state-specific numbers, Pennsylvania has seen a slow but steady increase month-by-month; In April, an additional 11,400 jobs were added to the state economy.
These reports have been released amid growing fears that rising inflation mixed with geopolitical developments around the globe could send the American economy back into turmoil as well as fears that our country may be heading into another recession between now and 2024. “I wouldn’t call it the calm before the storm, but it might be the last bit of sunlight before the clouds get a little deeper and darker,” said Drew Matus, chief market strategist at MetLife Investment Management.