Through May, the labor market recovery slowed a bit. There is no reason to fear.
The Bureau of Labor Statistics reported Friday that the US economy added 385,000 jobs in the month of July. The economists estimated a 325,000-payroll gain. The smallest one-month increase in a year is reflected in the May increase.
There were 436,000 new jobs created in April. The final count for March job creation came in at 398,000 added payrolls, down from the previous reading of 428,000.
According to the report, the unemployment rate stayed at 3.6%. Businesses are scrambling to rehire from a limited pool of available workers as the measure has lingered near five-decade lows.
Firms added 84,000 payrolls in May, which was the largest increase in payrolls in the month. The Friday report shows that companies that lead the way in hiring will continue to do so.
Business services gained 75,000 payrolls. Employment in the construction sector increased by 36,000.
Retailers lost the most in the labor market through May. It's possible that businesses over-hired as the economy reopened and Americans began to spend more in person. There could be room for further declines as firms look to find the most efficient level of employment.
The jobs recovery was chronicled in the May report. It was the first increase of that size since 2000 when the central bank lifted its benchmark interest rate by half a percentage point. It marked the beginning of a much more aggressive hiking cycle from the Fed. In order to cool the fastest inflation in four decades, more double-sized hikes will be on the table.
The new strategy is intended to put downward pressure on inflation, but it could also hurt the labor market. Demand is weakened by higher rates. Companies with lower revenues and less interest in hiring tend to suffer from that.
Powell said in May that the economy is well-equipped to handle tighter monetary policy. The hiring rebound is still going strong even though rates are on the rise.
Labor force participation went up to 62.3%. The measure shows how many Americans are working or looking for work. Improvements to participation suggest employers will have an easier time finding workers for the many millions of job openings outstanding in the economy.
Wages improved through May but at a slower rate than in the past. The average hourly earnings rose by just 10 cents, just missing the average forecast. Since February, that was the smallest increase. Inflation pressures in the labor market could be cooling off as the pace of wage growth slows.
The report shows no change to the labor market. The labor market is still making strides toward pre-pandemic health despite job growth exceeding expectations. The May jobs report shows that the US is not in a recession.
All Rights Reserved © 2024
