About us 
Summary
May's downshift in hiring to its slowest pace in more than a year still leaves payrolls rising at a robust pace. Employers topped consensus expectations with 390K new jobs. The ongoing solid pace of hiring has been fueled not only by sky-high demand but by more workers returning to the labor force. The labor force participation rate rebounded a tick in May, helping to keep the unemployment rate steady at 3.6% and wages from accelerating further.
Today's report lands in a sweet spot for the Fed. While the labor market remains clearly tight and is adding to inflationary pressures, improving labor supply is helping ease the upward pressure on wages while still allowing more workers to gain employment. But there is a long way to go before restoring the balance to the jobs market that will be needed for the Fed to win the battle on inflation, keeping the FOMC on track to tighten monetary policy aggressively at its next few meetings.
Job growth mostly broad-based
Nonfarm payrolls rose by 390K in May, down slightly from April's 436K pace. The ongoing employment recovery in leisure & hospitality continued with 84K net new jobs added in the month, led by restaurants & bars (+46K) and accommodation firms (+21K). Professional & business services and transportation & warehousing once again posted strong monthly gains of 75K and 47K, respectively. Manufacturing and construction employment also saw solid increases despite other recent data showing some tentative signs of cooling in these sectors. The retail sector was one of the lone disappointments. Retail employment declined 61K in May, which is consistent with weak earnings from some of the nation's largest retailers. We expect households to keep steadily shifting their consumption away from goods and toward services, and it would not surprise us if these shifting spending patterns are reflected in the employment reports over the next several months.
In total, nonfarm employment is down by 822K, or 0.5%, from its pre-pandemic level. Three major sectors account for these missing jobs: leisure & hospitality (down 1.3M from February 2020), health care (down 223K) and state and local government (down 634K). Encouragingly, all three of these sectors saw solid job growth in May, including a 52K employment increase for state and local governments, the largest increase since June 2021.
Download The Full Economic Indicator
previous
