U.S. Jobs Growth Improves in May but Unemployment Rate Rises; Earnings Gain Slips
- Surprising payroll gain follows upwardly revised estimates.
- Earnings growth slips.
- Jobless rate increases to seven-month high.
Nonfarm payrolls increased 339,000 last month (2.6% y/y) after rising 294,000 in April and 217,000 in March, revised from 253,000 and 165,000, respectively. Expectations had been for a 193,000 rise in the Action Economics Forecast Survey.
Average hourly earnings gained an expected 0.3% in May. This followed a 0.4% April gain, revised from 0.5%, after three straight months of 0.3% increase. The 4.3% y/y earnings increase remains down from a high of 5.9% y/y in March 2022.
The unemployment rate, measured in the household survey, rose to 3.7% in May from 3.4% in April. Expectations had been for 3.5%. Household employment fell 310,000 after rising 139,000 in April. The labor force rose 130,000 following a 43,000 decline. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, rose to 6.7% and has been trending sideways for eight months.
In the establishment survey, private-sector employment rose 283,000 in May (2.7% y/y) after a 253,000 April increase. Factory sector jobs eased 2,000 (+1.4% y/y) after rising 10,000 during April. Construction sector employment rose 25,000 (2.4% y/y) after gaining 13,000 in April.
Private service-producing employment increased 257,000 in May (2.8% y/y) after improving 225,000 in April. Increases continued to vary greatly amongst service sector categories. Education & health care jobs gained 97,000 (4.5% y/y). Professional & business services employment rose 64,000 (2.4% y/y) including a 7,700 rise (-3.0% y/y) in temporary help employment. Leisure & hospitality employment rose 48,000 (5.4% y/y). Financial employment increased 10,000 (0.9% y/y). Trade, transportation & utilities hiring improved 37,000 (1.0% y/y). Information sector hiring fell 9,000 (+0.3% y/y).
Government sector payrolls rose 56,000 last month (2.5% y/y) after increasing 41,000 in April. Local government jobs increased 30,000 (2.5% y/y). State government employment improved 19,000 (2.9% y/y) and federal government payrolls rose 7,000 (2.0% y/y) in May.
Private-sector average hourly earnings rose 0.3% in May for the fourth month in the last five. Earnings in the goods-producing sector improved 0.3% (4.6% y/y). Earnings in construction rose 0.4% (5.1% y/y) for the fourth straight month, while factory sector earnings edged 0.2% higher (4.1% y/y), the weakest increase in three months. In the private services sector, earnings rose 0.3%. The y/y increase of 4.3% is reduced from a high of 6.1% in March 2022. Information sector pay strengthened 1.6% (5.3% y/y) in May and financial activities earnings rose 0.5% (3.9% y/y). Trade, transportation & utilities sector pay increased 0.2% (4.6% y/y) last month. Professional & business sector earnings also rose a modest 0.2% (4.4% y/y). Private education and health services pay increased 0.3% (3.8%) in May. The 0.3% rise (5.5% y/y) in leisure & hospitality earnings left the y/y gain significantly below the 14.0% December 2021 peak.
The length of the average workweek eased to 34.3 hours in May, down from a peak of 35.0 hours in January 2021. The workweek in the goods-producing sector held at 39.9 hours for a third month. The construction sector average workweek eased to 38.8 hours, while the factory sector workweek remained at 40.1 hours, down from a recent high of 40.7 hours in March 2022. The average workweek in the private service sector steadied at 33.3 hours, but remained below the 34.0 hour high in early 2021. Financial sector hours were unchanged at 37.5 and information services hours slipped to 36.0. Professional & business service hours eased to 36.3 from 36.4 hours, down from a January 2021 high of 37.6, while leisure & hospitality hours remained at a relatively low 25.4 hours for the third straight month.
The private sector aggregate weekly hours index, a key indicator of production and income, eased 0.1% (+1.9% y/y) in May, following a 0.2% rise in April. It left the average level during the first two months of Q2 equal to the Q1 average.
The household survey indicated a rise in the jobless rate to 3.7% in May and was accompanied by a steady 62.6% labor force participation rate. The rate for teenagers dropped to 36.8% from 37.1%. For workers aged 20-24, the rate rebounded to 71.5% after tumbling to 70.9 which was the lowest level since November. For workers aged 25-54, the rate edged higher to 83.4%, the highest level since January 2007. For individuals 55 and over, the rate held at 38.4% in May, remaining well below its 40.5% in July 2019.
The employment/population ratio for all workers slipped in May to 60.3% after two months at 60.4%. It remained below its reading of 61.1% in February 2020 just prior to the pandemic.
The average duration of unemployment rose in May to 21.2 weeks from 20.9 weeks in the prior month, and it remained below a 32.0 week high in June of 2021. The median duration of unemployment rose to 8.6 weeks from 8.4 weeks, but remained below its 19.9 week high in June 2021.
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.
Tom MoellerAuthorMore in Author Profile »
Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.