Economic resiliency was on display as the jobs market roared back to life in May with 139,000 payrolls added—well ahead of expectations. The unemployment rate held firm at 4.2%, showing a steadying of the overall job market. This positive jump in job growth comes against a backdrop of mixed signals across multiple sectors, demonstrating the challenges and nuances of today’s economic reality.
The new report from the Bureau of Labor Statistics indicates the May increase in average hourly earnings was 0.4%. This was much more than expected, which had only called for a 0.3% increase for the month. On a year-over-year basis, earnings increased by 3.9%, just above the expected year-over-year growth of 3.7%. These numbers paint a promising picture that beyond robust hiring, wage growth is making significant progress too, reaching workers at all parts of the economy.
Hidden within the report were some pretty sizable downward revisions to the previous months’ employment numbers, which marked a significant slowdown in job growth. March’s total was lowered by 65,000 to 120,000, with the April count revised down 30,000. This large downward adjustment definitely calls into question the underlying strength of the labor market and could be a sign of caution going forward.
Sector-specific data revealed disparities in job creation. The leisure and hospitality sector was a huge driver here, adding 48,000 jobs in May alone. Health care produced a phenomenal 62,000 jobs—truly groundbreaking! This increase represented almost half of all the net new jobs added for the month. Equally encouraging was social assistance services, which saw an increase of 16,000 jobs.
The public sector took a big hit, shedding 22,000 jobs. This dramatic drop speaks to the precarious reality for public sector employment in the face of unsteady state and local budgets.
The other piece of employment data – the establishment survey – indicated a big jump in payrolls. In stark relief, the households survey showed a quick drop, counting 696,000 fewer workers. This difference highlights the importance of going deeper in analysis to reveal the interplay among various employment measures.