The US added 390,000 jobs last month as employers agreed to pay raises to make sure they have enough workers to keep up in a strong economy.
The Department of Labor said the jobless rate held steady at 3.6 per cent, just barely above the 50-year low of 3.5 per cent it reached in the months before the pandemic.
Businesses in many industries remain desperate to hire because their customers have kept spending freely despite intensifying concerns about high inflation.
Average hourly wages rose 10 cents in May to $31.95, the government said. That figure is up by 5.2 per cent in the past year, a strong figure under normal circumstances but not enough to keep up with inflation, which is going up at its fastest pace since the 1980s.
Higher wagers, too
US workers are enjoying nearly unprecedented bargaining power. The number of people who are quitting jobs, typically for better positions at higher pay, has been at or near a record high for six months.
The number of people ages 55 or over who are working rose last month, suggesting that some older Americans are “unretiring” after leaving their jobs or being laid off during the pandemic.
Just about every sector of the economy added jobs, with the exception of retail, which shed nearly 61,000 positions. But that lack of workers does not suggest a lack of jobs. Economist Claire Fan with RBC says businesses in high-contact, client-facing industries are having the biggest problem finding workers.
“Many of the workers that have switched industry over the pandemic will be harder to convince to return.”
Workers in the leisure and hospitality industry are seeing wage gains of almost twice the rate of average workers, Fan noted. “Acute labor shortages also mean that workers have been able to negotiate higher wages,” Fan said.
“Wage growth is set to accelerate further in the near-term but whether that’s enough to outrun inflation growth remains uncertain.”
There were 11 million job postings in the US last month, according to the official data, which means job openings “still outnumber unemployed workers by nearly two to one,” TD Bank economist Admir Kolaj said.
The strong job report suggests the US economy is in little danger of slipping into recession, with more than one million new hires in three months. It will also keep the US central bank on track to continue to raise interest rates, starting with a 50-point hike this month, and more to come.
“In this vein, today’s report provides further justification for the Fed to continue to remove monetary stimulus ‘expeditiously,’ with at least two more jumbo hikes of 50 basis points in the cards,” Kolaj said.