The U.S. economy added 339,000 jobs in the month of May and the unemployment rate ticked up to 3.7 percent as job losses outpaced gains, according to the latest employment report from the Bureau of Labor Statistics released Friday morning.
Payroll employment increases by 339,000 in May; unemployment rate rises to 3.7% https://t.co/ZwrVfLviqL #JobsReport #BLSdata
— BLS-Labor Statistics (@BLS_gov) June 2, 2023
Even though the headline number of jobs added beat economists' estimate of 190,000 new jobs, the rest of the report shows an economy struggling to slog forward under lasting inflation, the highest interest rates in more than a decade, and ongoing uncertainty.
In spite of the headline number, the unemployment rate came in higher than the predicted 3.5 percent as May's print reported 6.1 million unemployed Americans, an increase of 440,000 on the month.
The workforce participation rate held steady at 62.6 percent in May and, according to the jobs report, there are still 5.5 million Americans who want a job but aren't actively looking, remaining on the sidelines of the labor market.
Average wages increased 0.3 percent in May for a 4.3 percent year-over-year advance, continuing to lag behind inflation. That makes May another month in which Americans' real wages continue to run negative as lasting price increases continue to outpace wage growth.
Notably, wage increases — both monthly and annual numbers — showed slowing from the previous April with month-over-month growth going from 0.5 percent last month to 0.3 percent in May and year-over-year slipping from 4.4 percent in April to 4.3 percent in May.
As has been the case in the last two-plus years since President Joe Biden took office promising to build the U.S. economy "back better" following the COVID-19 pandemic, there are still numerous sectors of the job market that have not made up losses. Employment in government remains more than 200,000 jobs below the February 2020 level, while the leisure and hospitality sector is still down 349,000 (2.1 percent) from pre-pandemic levels.
That is, for Americans in those sectors, the economy has not been "built back" to where it was before COVID. For those who have seen their sectors rebound, they're still taking a cut to their real wages, a reality that certainly cannot be considered "better" than the pre-pandemic economy in which inflation did not erode their wages.
Many eyes now turn to see what the Federal Reserve led by Jerome Powell does with the economic reports — including Friday's jobs report — in recent weeks when the Fed next meets in mid-June for another interest rate decision.
There's still one more report, the May Consumer Price Index, yet to be released before the Fed meeting, but the most recent PCE price index — regarded by the Fed as its "preferred" inflation gauge — was "disastrous," as Townhall reported at the time.
While May's jobs report showing rising unemployment might give the Fed cause to pause its rate hikes, the CPI — especially if it matches what was seen in the PCE price index print — might be all that's needed to convince Powell and the central bank to keep hiking interest rates into the summer.
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