United States: Labor market conditions continue to improve in May
June 4, 2021
Total non-farm payrolls increased by 559,000 in May, a solid reading but missing analysts’ expectations of a 650,000 increase. This followed April’s 278,000 increase in payrolls. Employment gains occurred in leisure and hospitality, public and private education, and in health care and social assistance.
The unemployment rate ticked down from 6.1% in April to 5.8% in May, and the labor force participation rate was fairly stable at 61.6%. Hourly earnings rose 0.5% month-on-month in May (April: +0.7% mom), while annual wage growth accelerated to 2.0% from 0.4%. All in all, May’s reading is indicative of an economy well in recovery mode as the pandemic dissipates and stimulus feeds demand, although there is still some way to go to recover all the jobs lost last year.
On the reading and outlook, Katherine Judge, a senior economist at CIBC Economics, noted:
“Our research suggests that generous unemployment benefit supplements are the main factor holding employment growth back, as there were 8mn jobs open as of March. With many states moving to eliminate the supplements in June, however, this will likely be the last of the disappointing job prints. Millions of jobs are likely to be added over the summer months, a performance that could be good enough to have the Fed announcing an early 2022 QE tapering at this September's meeting.”
Author: Steven Burke, Economist