Haver Analytics
Haver Analytics
| Jun 07 2024

U.S. Payroll Employment & Wage Growth Improve in May; Jobless Rate Edges Up

  • Surprising strong job increase follows weakened April & March gains.
  • Earnings increase is better-than-expected, after weak April rise.
  • Unexpected jobless rate increase continues upward trend of last year.

Nonfarm payrolls increased 272,000 (1.8% y/y) in May after rising 165,000 in April, revised from 175,000, and 310,000 in March, revised from 315,000. Expectations had been for a 195,000 rise in the Action Economics Forecast Survey. The three-month average change of 249,000 compared to 237,000 in April.

Average hourly earnings increased 0.4% in May following an unrevised gain of 0.2% in April. The y/y earnings increase edged up to 4.1% from 4.0% but remained below the 5.9% high in March 2022. A 0.2% May increase had been expected.

The unemployment rate, measured in the household survey, rose to 4.0% in May from 3.9% in April. It reached a low of 3.4% in April of last year. An unchanged 3.9% had been expected. Household employment fell 408,000 after increasing 25,000 in April. The labor force fell 250,000 after an 87,000 April gain. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons held at 7.4%. It was the highest rate since November 2021.

In the payroll survey, private-sector employment increased 229,000 (1.6% y/y) in May after rising 158,000 in April. Construction sector employment increased 21,000 (3.2% y/y) last month after holding steady in April. Factory sector payrolls rose 8,000 (0.2% y/y) after improving 6,000. Mining & logging sector jobs fell 4,000 (-1.1% y/y) during May after declining 6,000 in April.

Private service-producing sector employment improved 204,000 in May (1.7% y/y) after a 158,000 April rise. Increases varied greatly amongst service sector categories. Education & health service jobs rose 86,000 (4.2% y/y) after rising 106,000 in April while leisure & hospitality employment rose 42,000 (2.5% y/y) after a 12,000 gain. Professional & business service jobs rose 33,000 (0.5% y/y) after easing 1,000 in April. Within that category, the number of temporary jobs fell 14,100 (-6.5% y/y) and have fallen consistently since a March 2022 high. Trade, transportation & utilities employment gained 27,000 (0.7% y/y) after rising 43,000 while financial activities jobs rose 10,000 (0.4% y/y) after easing 2,000 in April. Information sector employment held steady (-1.4% y/y) after no change.

Government sector payrolls improved 43,000 last month (2.8% y/y) after increasing 7,000 in April. Local government jobs jumped 34,000 (2.5% y/y) after falling 1,000 in May while state government employment rose 5,000 (3.6% y/y) after a 6,000 gain. The number of federal government jobs increased 4,000 (2.8% y/y) following a 2,000 rise.

The 0.4% May rise in private-sector average hourly earnings reflected a 0.4% gain (5.1% y/y) in the goods-producing sector which followed a 0.2% improvement in April. Earnings in construction improved 0.2% (5.0% y/y) while factory sector earnings rose 0.5% (5.1% y/y) following after edging 0.1% higher. In the private services-sector, earnings rose 0.4% last month (3.9% y/y) after a 0.2% gain. Professional & business service sector earnings grew 0.5% (4.3% y/y) after a 0.3% rise. Leisure & hospitality earnings strengthened 0.5% (4.1% y/y) after a 0.1% uptick. Information sector earnings rose 0.3% (2.5% y/y) after slipping 0.1%. Financial sector earnings increased 0.4% (5.7% y/y) for the third month in the last four. Private education & health services earnings strengthened 0.5% (3.2% y/y) after edging 0.1% higher in April. Trade, transportation and utilities pay rose 0.4% (3.7% y/y) in May after a 0.1 % rise.

The length of the average workweek in the private sector held at 34.3 hours in May after easing in April from 34.4 hours in March. The workweek in the goods-producing sector rose to 39.8 hours from 39.7 hours in April. The construction sector average workweek lengthened to 39.0 hours from 38.7. The factory sector workweek held steady at 40.1 hours while the average workweek in the private service sector was unchanged at 33.2 hours. The aggregate weekly hours index in the private sector, a key indicator of production and income, rose 0.2% in May (1.3% y/y) and reversed the August decline. So far the Q1 average is increased 1.7% (AR) from Q4’23.

In the household survey, the jobless rate rose to 4.0% as employment fell 0.3% and the size of the labor force eased 0.1%. The labor force participation rate slipped to 62.5%. The rate for teenagers increased to 38.1%, while for individuals aged 20-24, it dropped sharply to 70.8% from 72.4%. For rate for workers aged 25-54, the rate rose to 83.6%, a 24-year high, but for workers 55 and over, it fell slightly to 38.2 hours.

The employment/population ratio for all workers slipped to 60.1% in May remaining slightly below where it was twelve months earlier. It remained below its high 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.

  • 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.

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