U.S. Job Growth Eases in May, While Earnings Improve; Jobless Rate Is Unchanged

Nonfarm payrolls increased 139,000 (1.1% y/y) during May after rising 147,000 in April, revised from 177,000, and 120,000 in March, revised from 185,000. Expectations had been for a 125,000 rise in the Action Economics Forecast Survey. The three-month average change at 135,000 in May compared to 232,000 in January.

Average hourly earnings rose 0.4% during May after unrevised rises of 0.2% in April and 0.3% in March. Earnings growth of 3.9% y/y has been steady for five months. It has been trending lower from the 5.9% high in March 2022. A 0.3% increase was expected.

The unemployment rate, measured in the household survey, was steady m/m at an expected 4.2%. It compared to 4.2% in March, 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, held at 7.8% last month, down from 8.0% in February. It was 6.6% in April 2023.

In the establishment survey, private-sector employment in May rose 140,0100 (1.1% y/y) after a 146,000 April increase. Factory sector jobs declined 8,000 (-0.7% y/y) following a 5,000 gain. Construction sector employment increased 4,000 (1.4% y/y), after rising 7,000 in April.

Private service-producing sector employment increased 145,000 (1.3% y/y) in May after improving 132,000 in April. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 87,000 (3.5% y/y) last month following a 100,000 April increase. Leisure & hospitality employment rose 48,000 (1.5% y/y) after a 29,000 gain. Financial activities employment improved 13,000 (1.1% y/y) after a 3,000 gain. The number of information sector jobs rose 2,000 (-0.4% y/y) last month after holding steady in April. Trade, transportation & utilities rose 4,000 (0.6% y/y) in May after falling 8,000 in April. Professional & business services employment declined 18,000 (-0.3% y/y) following a 10,000 rise while temporary help employment declined 20,200 (-4.3% y/y) after rising 3,100 in April.

Government sector payrolls rose 1,000 (1.0% y/y) last month after increasing 1,000 in April. The number of local government jobs increased 21,000 (1.4% y/y) following an 11,000 gain. State government employment held steady (+1.6% y/y) following a 3,000 April increase but federal government payrolls fell 22,000 (-1.6% y/y), the largest of four consecutive monthly declines.

Private-sector average hourly earnings rose 0.4% (3.9% y/y) in May after increasing 0.2% in April. Earnings in the goods-producing sector gained 0.4% (4.1% y/y) following no change in April. Earnings in construction rose 0.3% (3.7% y/y), the same as in April but factory sector earnings strengthened 0.5% (4.4% y/y) after falling 0.2% in April. In the private services-sector, earnings rose 0.4% (3.8% y/y) in May following a 0.2% rise. Information sector pay increased 1.3% (6.2% y/y) last month after rising 0.9%, and private education health services earnings rose 0.5% (3.5% y/y) after rising 0.3%. Financial activities earnings rose 0.7% (4.4% y/y) following a 0.3% rise. Trade, transportation & utilities sector pay increased 0.3% (3.1% y/y) after 0.2%. Professional & business sector earnings increased 0.6% (4.9% y/y) after 0.2% in April. Leisure & hospitality earnings rose 0.2% (3.7% y/y) following a 0.1% April rise.

The length of the average workweek held steady at 34.3 hours in May. The workweek in the goods-producing sector was unchanged at 39.8 hours. The construction sector average workweek also held at 39.0 hours while the factory sector workweek edged up to 40.1 hours from 40.0. The average workweek in the private service sector eased to 33.2 hours from 33.3. Professional & business service hours held at 36.5 while trade, transportation & utilities hours eased to 34.0 from 34.1 hours. Private education hours fell slightly to 32.8, but leisure & hospitality improved to 25.7 hours.

In the household survey, the unemployment rate held at 4.2% in May as employment fell 696,000 after a 462,000 rise and the size of the labor force declined 625,000 following a 544,000 increase. The labor force participation rate eased to 62.4% last month from 62.6% in April. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.2%. For workers aged 20-24, the rate fell to 71.3%. For workers aged 25-54 the rate eased to 83.4%. For individuals 55 and over, the rate eased to 38.2% in May.

The employment/population ratio for all workers slipped to 59.7% from 60.0% in April. It remained below the peak reading of 61.1% in February 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.