US Shows Solid Job Gains in May but at Slowest Pace of Growth in a Year

US May nonfarm payrolls rose by 390,000 (consensus 391,000) with April’s also a revised 428K new jobs. May unemployment rate was 3.6% (consensus 3.5%), versus 3.6% in April and slightly above before the pandemic became widespread in the U.S. in February 2020. Wages grew 5.2% on the year, down from 5.5% in April. In the face of surging inflation May average hourly earnings rose 0.3% (consensus 0.4%) The change in private payrolls +406K, more than the +380K expected.

Working

May 2022 US Employment Report

The jobless rate stayed at 3.6% the Labor Department reported Friday. The unemployment rate is quickly approaching the February 2020 pre-pandemic rate of 3.5%, which was a 50-year low.

The market had expected the May report released Friday to show nonfarm payrolls rise 328k new jobs which it beat with 390k new jobs.  Employers added more than 400,000 jobs a month for 12 consecutive months, the longest period of such strong employment growth in records dating back to 1939.

US Jobs Report

US payrolls grew the most in leisure and hospitality in May, reflecting a shift in consumer demand from goods to services as pandemic restrictions fade. Professional, business services, transportation and warehousing businesses also posted solid gains.

The labor force participation rate, which measures the share of the population working or looking for work rose to 62.3% from 62.2% in April, a sign that plentiful jobs and higher wages are slowly drawing people back to work.

A severe labor shortage has driven up annual wage increases above 5% every month of this year. By contrast, wage gains averaged 3.2% in the 12 months to February 2020.

May 2022 US Employment Report and Expectations

Employment

  • US Nonfarm Payrolls May: 390K (est 320K; prev 428K; prevR 436K)
  • Unemployment Rate May: 3.6% (est 3.5%; prev 3.6%)
  • US Labour Force Participation Rate May: 62.3% (est 62.3%; prev 62.2%)
  • Two-month net revision -22K, March revised down by 30,000, from +428,000 to +398,000, and April revised up by 8,000, from +428,000 to +436,000.
  • US Change in Private Payrolls May: 333K (est 325K; prev 406K)
  • US Change in Manufacturing Payrolls May: 18K (est 40K; prev 55K)
  • Change in Government Payrolls May +57K (prev + 31K)
  • U6 underemployment rate 7.1% vs 7.0% prior
  • Long-term unemployed at 1.4m vs (prev 1.5m, 1.2m pre-pandemic)
  • The employment-population ratio 60.1% vs (prev 60.0%, 61.2% before pandemic)
  • Average Hourly Earnings (M/M) May: 0.3% (est 0.4%; prev 0.3%)
  • Average Hourly Earnings (Y/Y) May: 5.2% (est 5.2%; prev 5.5%)
  • US Average Weekly Hours All Employees May: 34.6 (est 34.7; prev 34.6)

The unemployment rate and number of unemployed persons prior to the coronavirus (COVID-19) pandemic was 3.5 percent and 5.7 million, respectively, in February 2020)

United States Unemployment Rate
United States Non Farm Payrolls
United States Non Farm Payrolls

Where the Jobs Were:

Job gains were widespread. In May, 7.4 percent of employed persons teleworked because of the coronavirus pandemic, down from 7.7 percent in the prior month.

Largest gains occurring in:

  • leisure and hospitality 84K. Led by food services and drinking places +40 6K, and accommodation +21K
  • professional business services, 75K
  • transportation and warehousing, 47K
  • wholesale trade +14.1 K
  • retail trade -60.7 K
  • information +16 K
  • financial activity, 8K
  • education and health services +74K
  • government, +57K
  • construction, 36K
  • mining and logging +5K
  • manufacturing +18 K

That leaves the economy down by 1.2 million jobs, or 0.8 percent, from its pre-pandemic level in February 2020.

Labour shortages continue to weigh even after federal government-funded unemployment benefits have expired and schools reopened. Some investors believe such shortages could get worse due to the White House’s vaccine mandate.

Private Jobs

United States Nonfarm Payrolls - Private

Government Jobs

 

United States Government Payrolls

Manufacturing Jobs

United States Manufacturing Payrolls

 

 Wages Monthly

United States Average Hourly Earnings MoM

Wages Yearly

United States Average Hourly Earnings YoY

 Hours

United States Average Weekly Hours

 


May Employment Reports


Household Survey Data  

In May, the unemployment rate was 3.6 percent for the third month in a row, and the number of
unemployed persons was essentially unchanged at 6.0 million. These measures are little different from
their values in February 2020 (3.5 percent and 5.7 million, respectively), prior to the coronavirus
(COVID-19) pandemic.

Among the major worker groups, the unemployment rate for Asians declined to 2.4 percent in May.
The jobless rates for adult men (3.4 percent), adult women (3.4 percent), teenagers (10.4 percent),
Whites (3.2 percent), Blacks (6.2 percent), and Hispanics (4.3 percent) showed little or no change over
the month.

Among the unemployed, the number of permanent job losers remained at 1.4 million in May. The
number of persons on temporary layoff was little changed at 810,000. Both measures are little different
from their values in February 2020.

In May, the number of long-term unemployed (those jobless for 27 weeks or more) edged down to 1.4
million. This measure is 235,000 higher than in February 2020. The long-term unemployed accounted
for 23.2 percent of all unemployed persons in May.

Both the labor force participation rate, at 62.3 percent, and the employment-population ratio, at 60.1
percent, were little changed over the month. Both measures are 1.1 percentage points below their
February 2020 values.

The number of persons employed part time for economic reasons increased by 295,000 to 4.3 million
in May, reflecting an increase in the number of persons whose hours were cut due to slack work or
business conditions. The number of persons employed part time for economic reasons is little different
from its February 2020 level. These individuals, who would have preferred full-time employment, were
working part time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons not in the labor force who currently want a job was little changed at 5.7
million in May. This measure remains above its February 2020 level of 5.0 million. These individuals
were not counted as unemployed because they were not actively looking for work during the 4 weeks
preceding the survey or were unavailable to take a job.

Among those not in the labor force who wanted a job, the number of persons marginally attached to
the labor force, at 1.5 million, changed little in May. These individuals wanted and were available for
work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4
weeks preceding the survey. Discouraged workers, a subset of the marginally attached who believed
that no jobs were available for them, numbered 415,000 in May, also little changed from the prior
month.


Household Survey Supplemental Data

In May, 7.4 percent of employed persons teleworked because of the coronavirus pandemic, down
from 7.7 percent in the prior month. These data refer to employed persons who teleworked or worked at
home for pay at some point in the 4 weeks preceding the survey specifically because of the pandemic.

In May, 1.8 million persons reported that they had been unable to work because their employer closed
or lost business due to the pandemic—that is, they did not work at all or worked fewer hours at some
point in the 4 weeks preceding the survey due to the pandemic. This measure is little changed from the
previous month. Among those who reported in May that they were unable to work because of pandemic related closures or lost business, 19.9 percent received at least some pay from their employer for the hours not worked, also little different from the prior month.

Among those not in the labor force in May, 455,000 persons were prevented from looking for work
due to the pandemic, down from 586,000 in the prior month. (To be counted as unemployed, by
definition, individuals must be either actively looking for work or on temporary layoff.)

These supplemental data come from questions added to the household survey beginning in May 2020 to
help gauge the effects of the pandemic on the labor market. The data are not seasonally adjusted. Tables
with estimates from the supplemental questions for all months are available online at
www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm.


Establishment Survey Data

Total nonfarm payroll employment rose by 390,000 in May. Notable job gains occurred in leisure and
hospitality, in professional and business services, and in transportation and warehousing. Employment in
retail trade declined over the month. Nonfarm employment is down by 822,000, or 0.5 percent, from its
pre-pandemic level in February 2020. (See table B-1.)

Employment in leisure and hospitality increased by 84,000 in May, as job growth continued in food
services and drinking places (+46,000) and accommodation (+21,000). Employment in leisure and
hospitality is down by 1.3 million, or 7.9 percent, compared with February 2020.

Employment in professional and business services rose by 75,000 in May. Within the industry, job
gains occurred in accounting and bookkeeping services (+16,000), computer systems design and related
services (+13,000), and scientific research and development services (+6,000). Employment in
professional and business services is 821,000 higher than in February 2020.

In May, transportation and warehousing added 47,000 jobs. Employment rose in warehousing and
storage (+18,000), truck transportation (+13,000), and air transportation (+6,000). Employment in
transportation and warehousing is 709,000 above its February 2020 level.

Employment in construction increased by 36,000 in May, following no change in April. In May, job
gains occurred in specialty trade contractors (+17,000) and heavy and civil engineering construction
(+11,000). Construction employment is 40,000 higher than in February 2020.

In May, employment increased by 36,000 in state government education and by 33,000 in private
education. Employment changed little in local government education (+14,000). Compared with
February 2020, employment in state government education is up by 27,000, while employment in
private education has essentially recovered. Employment in local government education is down by
308,000, or 3.8 percent, compared with February 2020.

Employment in health care rose by 28,000 in May, including a gain in hospitals (+16,000).
Employment in health care overall is 223,000, or 1.3 percent, lower than in February 2020.
Manufacturing employment continued to trend up in May (+18,000). Job gains occurred in fabricated
metal products (+7,000), wood products (+4,000), and electronic instruments (+3,000). Employment in
manufacturing overall is slightly below (-17,000 or -0.1 percent) its February 2020 level.

Wholesale trade added 14,000 jobs in May, including gains in durable goods (+10,000) and electronic
markets and agents and brokers (+6,000). Employment in wholesale trade is down by 41,000, or 0.7
percent, compared with February 2020

Mining employment increased by 6,000 in May and is 80,000 higher than a recent low in February in 2021

Employment in retail trade declined by 61,000 in May but is 159,000 above its February 2020 level.
Over the month, job losses occurred in general merchandise stores (-33,000), clothing and clothing
accessories stores (-9,000), food and beverage stores (-8,000), building material and garden supply
stores (-7,000), and health and personal care stores (-5,000).

In May, employment showed little change in other major industries, including information, financial
activities, and other services.

Earnings

Average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3
percent, to $31.95 in May. Over the past 12 months, average hourly earnings have increased by 5.2
percent. In May, average hourly earnings of private-sector production and nonsupervisory employees
rose by 15 cents, or 0.6 percent, to $27.33.

In May, the average workweek for all employees on private nonfarm payrolls was 34.6 hours for the
third month in a row. In manufacturing, the average workweek for all employees was little changed at
40.4 hours, and overtime fell by 0.1 hour to 3.2 hours. The average workweek for production and
nonsupervisory employees on private nonfarm payrolls remained unchanged at 34.1 hours.

The change in total nonfarm payroll employment for March was revised down by 30,000, from
+428,000 to +398,000, and the change for April was revised up by 8,000, from +428,000 to +436,000.
With these revisions, employment in March and April combined is 22,000 lower than previously
reported. (Monthly revisions result from additional reports received from businesses and government
agencies since the last published estimates and from the recalculation of seasonal factors.)


The Employment Situation for May is scheduled to be released on Friday, July 8, 2022, at 8:30
a.m. (ET)


Source: AFP, Challenger, DOL, TradersCommunity Data, BLS

From The TradersCommunity News Desk