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Job Growth Shines: May Payrolls Beat Predictions by 339K
The US economy continued to generate employment in May, despite macroeconomic challenges. Nonfarm payrolls increased to 339,000, significantly surpassing Dow Jones’ expectations of 190,000, as a result, May marked the twenty-ninth consecutive month of positive job growth in the country.
According to the US Bureau of Labor Statistics, although the unemployment rate rose to 3.7% compared to the estimated 3.5%, the labor market remained strong. Similarly, average hourly earnings increased by 0.3%, as expected, while annual wages rose by 4.3%, slightly below the estimate.
The term “payrolls” refers to the total number of employees receiving a salary or wage during a specific period. This measure is used to assess workforce strength and job creation in an economy.
The US Labor Market Defies Economic Challenges with Robust Job Growth
Becky Frankiewicz, President and Chief Commercial Officer of Manpower Group, a Fortune 500 American multinational corporation headquartered in Milwaukee, Wisconsin, highlighted the resilience of the US labor market amidst economic challenges such as inflation and high-profile layoffs.
“The US labor market continues to show resilience amid various challenges, from inflation to high-profile layoffs and rising gas prices. With 339,000 job openings, we’re still rewriting the rule book, and the US labor market continues to defy historical definitions,” said Frankiewicz.
The Department of Labor indicated that professional and business services led the job creation with 64,000 jobs, followed by the government with 56,000 jobs, and the healthcare sector with 52,000 jobs.
Unemployment Rate Raises Concerns despite Positive Job Market Trends
Not all news in the labor sector was positive, as the unemployment rate continued to increase significantly by 0.3% to reach 3.7% (6 million unemployed individuals), due to a decline in self-employed workers.
“The unemployment rate increased by 0.3 percentage point to 3.7 percent in May, and the number of unemployed persons rose by 440,000 to 6.1 million. The unemployment rate has ranged from 3.4 percent to 3.7 percent since March 2022,” reads the employment situation news release.
Although some US politicians anticipate a future recession, as is already happening in some European countries like Germany, US consumers continue to spend, and the resilient labor market continues to support expenditure.
Despite mounting concerns voiced by experts and officials within the Federal Reserve, the central bank continues its pursuit of higher interest rates as a means to tackle the persistent inflationary pressures. However, these measures have fallen short of achieving the desired outcome and may pose greater long-term challenges.
Therefore, even though jobs increased to 339,000 in May, it is possible that the Federal Reserve will continue to apply its aggressive policy of economic tightening in the coming months, or at least until significant improvements are observed in inflation indicators.
