Today’s jobs report revealed the US labor market remains remarkably resilient, with total employment growing by a robust 339,000 jobs in May. This follows an upward revision of April’s data to 294,000 total jobs added—another sign of the labor market’s ongoing strength. Job gains in May were economy-wide, with almost every industry adding jobs—including construction, government, health care and social assistance, leisure and hospitality, professional and business services, and transportation and warehousing.
In terms of wage dynamics, the pace of wage growth continues to moderate compared to last year but remains above pre-pandemic rates. Average hourly earnings were up 4.3 percent year-over-year in May, down slightly from 4.4 percent in April. The persistence of strong job gains and elevated wage growth, coupled with the prevailing inflationary pressures, leads us to anticipate that the Federal Reserve will take further measures to tighten monetary policy. Specifically, we project at least one more interest rate hike of 25 basis points —reflecting the inflationary pressures of continued wage growth.
Report Details
The Household Survey reveals that the unemployment rate ticked up from 3.4 percent in April to 3.7 percent in May. The change is mainly driven by an increase in the youth unemployment rate, with the unemployment rate among 16-19-year-olds rising from 9.2 percent to 10.3 percent and the unemployment rate among 20-24-year-olds rising from 5.4 percent to 6.3 percent. The latter can partially be attributed to an increase in the labor force participation rate for this age group from 70.9 percent in April to 71.5 percent in May. Still, labor force participation among 20–24-year-olds has yet to fully recover to its prepandemic level of 73.4 percent in February 2020. Meanwhile, the labor force participation rate remained stagnant at 62.6 percent, which stands 0.7 percentage points below its pre-pandemic level in February 2020.
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