June 2, 2023

The US economy added +339,000 jobs in May, beating expectations of a +190,000 gain.

Previous months were also revised upwards by +52k in March and +41k in March, for a total of +93k.

As a result, average job gains over the past three months were +283k per month, down from an average rate of +399k per month in 2022.

Jobs gains in May were led by professional and business services (+64k), government (+56k), and health care (+50k). Leisure and hospitality added +48k jobs in May, but remains -349k (-2.1%) below its pre-pandemic levels.

Other contributors to net job gains included construction (+25k), transportation and warehousing (+24k), and social assistance (+22k). Employment in other major industries, including retail and manufacturing, were little changed.

Despite these job gains, the US unemployment rate rose +0.3 points to 3.7%.

The labor participation rate in May remained unchanged at 62.6%, though this remains below pre-Covid levels.

Much of the post-Covid decline in labor participation has come from a persistent fall-off among those age 55 and older.

In contrast, the employment-to-population ratio among those of prime working age (25-54) stands at 80.7%, higher than both its pre-Covid and pre-2008 peaks.

Average hourly wages rose +0.3% m/m in May, up +4.3% from a year ago. However, this remains below the rate of consumer inflation (CPI = +5.0% y/y in April) so real wages have still declined.

In 1Q2023, real hourly wages were down -1.0% from a year ago.