U.S. Economy Continues to Add Jobs Despite Headwinds

Despite the presence of multiple headwinds, the U.S. economy continued to add jobs in May.

Payrolls increased by 339,000, surpassing the Dow Jones estimate of 190,000 and marking the 29th straight month of job growth.

The unemployment rate rose to 3.7%, though still near the lowest since 1969, and average hourly wages increased 0.3% for the month, in line with expectations.

Markets reacted positively to the report, with the Dow Jones Industrial Average rising by more than 400 points in early trading. The job numbers were also met with approval by Becky Frankiewicz, president and chief commercial officer of Manpower Group, who stated that “the U.S. labor market continues to demonstrate grit amid chaos”.

Professional and Business Services Lead the Jobs Growth

Professional and business services were the top job creators for the month, with a net of 64,000 new hires. Government followed with 56,000 jobs, while health care contributed 52,000. Other notable gainers included leisure and hospitality (48,000), construction (25,000) and transportation and warehousing (24,000).

Despite the strong monthly hiring, the unemployment rate still went up, due in large part to a sharp decline of 369,000 in self-employment. Average weekly hours worked also dropped to 34.3, which is the lowest since the Covid nadir in April 2020. An alternative measure of unemployment, which includes discouraged workers and those holding part-time jobs for economic reasons, edged higher to 6.7%.

May’s jobs report suggests that the economy is nowhere close to a recession, according to Goldman Sachs’ Jan Hatzius. Recent data has shown that consumers are continuing to spend, and the labor market has helped support that.