Payrolls rose 390,000 in May, better than expected as companies keep hiring

In May, 390,000 U.S. jobs were added, which was more than the Bureau of Labor Statistics expected, despite economic fears and an accelerating pace of inflation.

The unemployment rate remained at 3.6% which is the highest level of employment since December 1969.

Dow Jones surveyed economists and they expected nonfarm payrolls growth of 328,000, with a lower unemployment rate at 3.5%. This was an increase from April’s upwardly revised total of 436,000 and the lowest monthly gain for 2021.

Glassdoor’s senior economist Daniel Zhao said that despite the cooling trend, there is no sign of the labor market slowing down and is ignoring any concerns about a downturn. We continue to observe signs that the job market is healthy and competitive, but there are no indications of slowing down.

In April, the average hourly earning increased 0.3%. This is slightly more than the 0.4% estimate. This was expected.

The report caused volatility in stock markets and led to lower Wall Street open. Higher yields were seen in government bonds.

The job growth was broad-based. The sector that added the most jobs was leisure and hospitality with 84,000 new positions. Business and professional services grew 75,000; transportation and warehousing contributed 47,000 while construction jobs increased by 36,000

The state’s education system (36,000), the private sector (33,000), healthcare (28,000), manufacturing (18,000), wholesale trade (14,000) were some other areas to see notable improvements.

The retail trade sector suffered a loss of 61,000 in May. However, the BLS reported that it remains at 159,000 over its pre-pandemic February 2020 level.

Drew Matus chief market strategist, MetLife Investment Management said that the numbers were not consistent with consumers who are eager to buy goods. The accommodation and food service story shows that people are shifting from goods to services spending. But the real question is, “How long can this continue?”

The BLS household survey revealed that despite the employment gains, there are still many jobs to be filled. The pre-Covid total of 440,000 employees is the current level.

The labor force participation rose to 62.3%, but it is still below 1.1 percent in February 2020. This is because the labor force has shrunk by 207,000.

An all-encompassing measure of unemployment which takes in those who have not been looking for employment and those working part-time for economic reasons was 7.1%. That’s one-tenth percent more than the April rate. The rate of unemployment for Asians dropped to 2.4%. This is the lowest level in almost three years. However, it rose by 0.3 percentage points for Blacks, who saw 6.2%.

Revised March and April Job Estimates have shaved 22,000 of the totals previously reported.

Matus suggested that market reactions likely indicate investors anticipating Fed interest rate rises as well slowing job market. Fed officials stated that they want to balance the job market, despite the high demand for jobs and the low supply of labor.

Matus explained that although it wouldn’t be called the calm before a storm, it could still represent the last bit light before the clouds grow deeper and darker.

This report is released amid concerns about higher inflation and geopolitical developments, including the war in UkraineAnd CovidChina restrictions may have an adverse impact on the U.S. Economy, which experienced a contraction of 1.5% during the first quarter.

Although there are signs of inflation slowing in recent months, this pace remains the fastest for 40 years. According to AAA, prices at the pump are currently at historic highs. A gallon of regular, unleaded gasoline is $4.76. This represents an increase of 13% and 56% respectively from one month ago.

According to the Federal Reserve, this is due to a slowing economy which currently grows at just 1.3% per quarter.

The Fed has a number of interest rate increases in place to try to curb inflation. Fed Governor Lael Brainard told CNBC on ThursdayShe anticipates that inflation will continue to rise until it reaches 2%, which she believes is the case in the months ahead.

The current economic environment has caused businesses to be hampered, not only by the shortage of skilled workers which has created nearly two jobs for each worker. A Fed report earlier this week said businesses are expressing increasing concerns about future prospects – eight of the central bank’s 12 districts reported slowing growth while four specifically cited recession fears.

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