The latest report from the U.S. Bureau of Labor Statistics reveals that total nonfarm payroll employment increased by 339,000 in May, while the unemployment rate rose by 0.3 percentage points to 3.7 percent. The sectors that experienced job gains include professional and business services, government, health care, construction, transportation and warehousing, and social assistance. The unemployment rate for adult women and Blacks saw a slight increase, while the rates for adult men, teenagers, Whites, Asians, and Hispanics remained relatively stable. The report also highlights that the average hourly earnings for all employees on private nonfarm payrolls rose by 0.3 percent in May, with a 4.3 percent increase over the past 12 months.
In terms of specific industries, professional and business services saw an increase of 64,000 jobs, with growth mainly observed in professional, scientific, and technical services. Government employment also rose by 56,000 jobs, while the health care sector added 52,000 jobs. Leisure and hospitality continued its upward trend with an addition of 48,000 jobs, primarily in food services and drinking places. Construction saw an increase of 25,000 jobs, including 11,000 in heavy and civil engineering construction. Transportation and warehousing employment rose by 24,000 jobs, and social assistance added 22,000 jobs.
The report also includes revisions to previous months' data, revealing that total nonfarm payroll employment in March and April combined was 93,000 higher than previously reported. These revisions reflect additional reports received from businesses and government agencies and the recalculation of seasonal factors.
Our view remains positive towards the US economy with a possible soft recession coming in Q4, although these numbers suggest continued strength. Continued labor strength could portend further rate hikes due to the Fed’s dual mandate. If the labor market continues to remain strong, the Fed can deliver further hikes and continue its monetary stance.
Overall, the May employment report shows positive growth in various sectors of the economy, with job gains in several industries and an increase in average hourly earnings. However, the rise in the unemployment rate indicates ongoing challenges in the labor market, particularly for certain demographic groups. The report provides valuable insights into the current state of the U.S. job market and will be closely monitored to assess the trajectory of economic recovery.
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