Despite Economic Slowdown, American Employers Added 339,000 Jobs

Employment in the U.S. rose last month as American employers added 339,000 jobs, far exceeding expectations, according to a report from the Labor Department released on Friday. The increase in jobs for March and April was also higher than previously reported. The April job number was revised upward by 41,000, while the March figure was revised upward by 52,000, NPR reported.

Wages in the public and private sectors rose by 339,000 for this month, better than the estimate from Dow Jones of 190,000, marking the 29th consecutive month of positive job growth. The unemployment rate in May rose to 3.7 percent compared to the estimate of 3.5 percent, although the labor force participation rate remained unchanged. The unemployment rate was the highest since October 2022, although it is still close to the lowest since 1969.

Average hourly earnings, a key inflation indicator, rose by 0.3 percent for the month, in line with expectations. Year-over-year, wages increased by 4.3 percent, which is 0.1 percentage points below the estimate. The average workweek decreased by 0.1 hour to 34.3 hours.

Markets reacted positively to the report, with futures tied to the Dow Jones Industrial Average up about 200 points. Yields on government bonds also rose. The jump in employment in May was nearly in line with the 12-month average of 341,000 in a labor market that has held up remarkably well in a slowing economy, reported NBC News.

Constant Increase in Interest Rates

Professional and business services led to job openings in the month with a net of 64,000 new hires. The government contributed to the increase with an additional 56,000 jobs, while healthcare added 52,000. Other significant gains included leisure and hospitality (48,000), construction (25,000), and transportation and warehousing (24,000).

The job numbers for May come at a challenging time for the economy, with many experts still expecting a recession later this year or early 2024. Recent data showed that consumers continue to spend, although they are increasingly saving and using credit cards to pay for their purchases.

A resilient labor market has also helped support consumption, with the number of job openings in April climbing back above ten million as employers still struggle to fill vacant positions. Additionally, it seems that one major potential problem for the U.S. economy has been alleviated, as warring parties in Washington reached an agreement on the debt ceiling this week.

However, other issues remain for the U.S. The Federal Reserve has raised benchmark interest rates ten times since March 2022 in an effort to combat persistent inflation. In recent days, some policymakers have shown a willingness to take a pause from a series of increases in June to see what effect tightening policy has on the economy.

Other data shows that the manufacturing sector of the economy is in contraction, although the much larger services sector has maintained expansion. The ISM manufacturing index released on Thursday also showed that prices are pulling back, which is a positive sign for the Fed, NBC reported.