May Jobs - Mixed Signals

Payrolls surprised positively, wage growth slowed, unemployment rose.  The U.S. labor market added 339K jobs in May after an upwardly revised +294K in April and the unemployment rate jumped 0.3% to 3.7%.  Meanwhile, average hourly earnings growth decelerated to 0.3% month-over-month, down from 0.5% in April.  There are certainly some mixed signals from this report.  Continued robust payroll additions are a sign of economic strength, while decelerating wage growth and rising unemployment tell a different story.  On June 14, Fed policymakers will decide whether to pause interest rate hikes or increase by another 0.25%.

• 339K jobs added in May – Significantly higher than expected.  The U.S. labor market added 339K jobs in May compared to forecasts ranging from +100K to +250K with a median of +195K and consistent with the trailing twelve month average of +341K.  The April outcome (+253K) was revised upward to +294K.  Job gains were broad-based with notable additions in professional & business services (+64K), health care (+52K), leisure & hospitality (+48K), and construction (+25K).
• 3.7% unemployment – remains historically low.  The U.S. unemployment rate jumped to 3.7% from 3.4% a month ago.  Forecasts ranged from 3.3% to 3.6% with a median of 3.5%.  Unemployment has remained in a range of 3.4%-3.7% for the last twelve months.  The labor force participation rate was unchanged at 62.6% – matching the highest level since March 2020.  Wage growth decelerated slightly with hourly earnings up 4.3% over the last year (above expectations of +4.4%; down from +4.4% in April) and 0.3% month-over-month (in line with expectations of +0.3%; down from +0.5% in April).