United States: Labor market remains robust in May
Total non-farm payrolls increased by 390,000 in May, down slightly from April’s 436,000 revised figure but notably above market expectations. Employment gains were particularly strong in leisure and hospitality, in professional and business services, and in transportation and warehousing, with the latter supported by firms’ desire to relieve supply bottlenecks and meet production requirements. However, employment in retail declined, likely a reflection of consumers pivoting more towards spending on services as the pandemic has faded from public view.
Meanwhile, the unemployment rate was unchanged at 3.6% in May, while hourly earnings were up 0.3% month-on-month and 5.2% year-on-year. All in all, the data shows the labor market remained strong midway through Q2. However, employment growth is gradually trending down, firms are struggling to find staff and elevated inflation—which is currently tracking well above wage growth—is hurting purchasing power.
On the outlook, TD Economics’ Admir Kolaj said:
“The labor market has recovered the bulk of the jobs lost during the pandemic, with payrolls down only 0.5% from February 2020. Meanwhile, the unemployment rate is holding at 3.6% – just a hair above its pre-pandemic low. With the easy gains behind us and the labor market drum tight, we believe that the strong performance at the start of the year is unlikely to be repeated, and that payroll gains are poised to slow further in the quarters ahead.”