WASHINGTON (AP) — U.S. employers added 272,000 jobs in May; From April This also indicates that companies still have enough confidence in the economy to continue hiring, despite interest rates remaining high.
Last month’s big job gains suggest the economy is still growing steadily, fueled by consumer spending on travel, entertainment and other services. U.S. airports, for example, are Near record traffic Memorial Day weekend. A healthy job market typically drives consumer spending, the economy’s main driver. Some recent signs have raised concerns about a weak economy, but the May jobs report should help ease those fears.
Still, Friday’s government report included some signs of a possible economic slowdown. For example, the unemployment rate rose for the second straight month to a still-low 4% from 3.9%, ending a 27-month streak with the unemployment rate below 4%, tying the longest streak since the late 1960s.
President Joe Biden pointed to Friday’s jobs report as a sign of the economy’s strength under his administration and blamed Republicans in Congress for worsening inflation by slashing health care benefits and widening the deficit with tax cuts.
Republican presidential candidate Donald Trump has criticized Biden’s economic policies, Inflation surgesPolls show that this still figures heavily into voters’ assessment of the economy. At a rally in Phoenix on Thursday, he said: Blamed illegal immigrants This contributed to the increase in prices.
Economists said the conflicting signals in Friday’s report — a hiring surge and a slight rise in the unemployment rate — were more likely a sign that the job market was normalizing after years of pandemic-related distortions. Hiring surged in 2022 and 2023 as the economy recovered quickly after a severe pandemic-induced recession that saw the unemployment rate soar to nearly 15%. Wages, unadjusted for inflation, also soared as companies desperately scrambled to fill jobs.
“While job growth remains strong, there’s ample evidence that the labor market enthusiasm of the past few years has largely dissipated,” said Sarah House, an economist at Wells Fargo.
The government said this week that job vacancies, while still high, have fallen to a three-year low. Job turnover is falling after a surge in job losses following the pandemic, and many employers say it’s getting easier to find people to fill open roles.
But after several months of weakness, hourly wage growth accelerated last month, a welcome boost for workers but one that could lead to inflation taking hold. Hourly wages rose 4.1% year-on-year, outpacing inflation and growing faster than in April. Some businesses may raise prices to offset rising wage costs.
Federal Reserve inflation experts are hoping the economy will calm down a bit before considering when to start cutting interest rates. The Fed has raised interest rates sharply in 2022 and 2023 after a strong recovery from the pandemic recession sparked the worst inflation in four decades.
Friday’s report is likely to underscore Fed officials’ desire to hold off on cutting the central bank’s benchmark interest rate while they monitor inflation and economic data. Most economists expect the Fed not to cut rates until September at the earliest. When it does, that should lower interest rates on many consumer and business loans, including mortgages and auto loans.
Chairman Jerome Powell expects inflation to continue to ease but stressed that Fed policymakers need “more confidence” that inflation will return to the Fed’s 2% target before cutting borrowing costs. Annual inflation by the Fed’s preferred measure has fallen to 2.7% from a peak of more than 7% in 2022.
“This report will complicate the Fed’s job,” said Julia Pollack, chief economist at ZipRecruiter. “Nobody’s getting the crystal clear signal that everyone was hoping for that a rate cut would be appropriate in July or September.”
Hiring was broad-based across most sectors of the economy last month, but the biggest gains were in health care, which added 84,000 jobs, and restaurant, hotel and entertainment service providers, which added 42,000 jobs.
Government, particularly local government, added 43,000 jobs. Professional and business services, which include administrative, architectural and information technology occupations, added 33,000.
In one possible sign of weakness in the May jobs report, the percentage of Americans who have a job or are looking for work fell from 62.7% to 62.5%. Most of the decline occurred among people over the age of 55, many of whom are retiring baby boomers.
A surge in immigration over the past three years has expanded the size of the U.S. workforce and been a key driver of healthy job growth. (Economists say it’s unclear whether the government’s jobs report reflects all of that growth, especially among undocumented immigrants.)
The government said last week that the economy grew at an annualized rate of just 1.3% in the first three months of the year, a sharp slowdown from 3.4% in the fourth quarter of last year. But much of the slowdown reflected drawdowns in business stockpiles and other uncertainties, while consumer and business spending provided a clear signal that demand was holding up.
But consumer spending fell in April on an inflation-adjusted basis, raising concerns among economists that rising inflation and interest rates are putting increasing pressure on some consumers, particularly younger and lower-income households.
A key reason the economy is still producing strong net job gains is that layoffs remain at historic lows. Just 1.5 million people lost their jobs in April, the lowest monthly figure on record in the past 24 years of data, excluding the peak of the pandemic. After years of struggling to fill positions, most employers are reluctant to lay off employees.
