June 2, 2023
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).