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U.S. employers hired 559,000 workers in May, almost double April’s revised number of 278,000, the U.S. Labor Department reported.
The gains fell short of economists’ median estimate that the economy would deliver 674,000 jobs last month, according to Business Insider.
In a 1 June speech to the New York Economic Club, Fed governor Lael Brainard predicted that worker shortages would largely disappear this fall when the federal unemployment benefit lapses and the national vaccination has had more months to progress.
The unemployment rate notched down from 6.1 percent in April to 5.8 in May, the Labor Department said, the first time since March 2020 the number has dipped below 6 percent.
Leisure and hospitality added the most jobs at 292,000, as people returned to restaurants, airports, and hotels. Education and health care also showed strong gains. The construction industry shed 20,000 workers, due in part to a shortage of materials and a continuing scarcity of public-sector building projects.
At May’s pace, the economy will need 14 months to produce enough jobs to return payrolls to February 2020 levels and longer to resume the pre-crisis upward trend in jobs, wrote Wall Street Journal analyst Neil Irwin on 5 June.
“If you average the last three months of job creation, employers are adding 541,000 positions a month,” Irwin said, “a higher number than was attained for even a single month in the recovery that began in 2009.”
“But it does not imply a return to full health in the immediate future,” he added.
“It’s a middle-of-the-road report,” Matthew Luzzetti, Deutsche Bank’s chief U.S. economist, told the WSJ.
“It’s disappointing relative to where we were a few months ago, where we were anticipating you could see a million-plus” new jobs a month, he said.
“We have to ratchet down our expectations about what job gains are likely to be,” he added.
“We can’t reboot the world’s largest economy like flipping a light switch,” President Biden said in televised public comments, but “we’re on the right track.”
The Labor market’s recovery has lagged in jobs in manufacturing and consumer spending.
A record number of jobs remain open, the WSJ noted, and the number of people in the labor force remained steady, indicating that signing bonuses, higher wages, and other perks failed to lure as many workers as employers had hoped.
About half of U.S. small businesses have unfilled jobs open, according to a recent survey by the National Federation of Independent Businesses.
The labor force participation rate sagged in May to 61.6 percent, compared to 63.3 percent in February 2020, signaling that about 160,000 more workers are no longer looking for jobs.
About 9.3 million U.S. workers are still jobless, roughly 7.6 million more than before March 2020.
TREND FORECAST: As we have forecast, hiring will continue to moderately increase, especially when schools reopen and child care expenses lessen. And, as we have noted, although half the states have ended the Federal $300 weekly jobless benefit, when they officially end in September and more people have been vaccinated, hiring will increase.
And so, too, will inflation rise higher. Already, average hourly compensation edged up 15 cents to $30.33 in May after gaining 21 cents in April, with wages for leisure and hospitality workers gaining 4 percent over the past 12 months. The average hourly pay in those industries was $18.09 last month.