Today's May jobs report from the Bureau of Labor Statistics (BLS) shows that U.S. companies are continuing to hire for new roles, adding 390,000 jobs to the economy last month, more than the 328,000 economists had expected.
While job growth has slowed since April, when the U.S. economy added a revised 436,000 jobs, the labor market still remains strong. The unemployment rate remained unchanged at 3.6%, for the third month in a row, with the number of unemployed individuals at 6 million. The BLS also noted that figure isn't far off from what it was prior to the onset of the COVID-19 pandemic in February of 2020, at 5.7 million. Economists were expecting the unemployment rate to drop to 3.5%.
Hourly wages continued to tick upward, increasing 0.3% on average last month, in a sign that companies are still feeling the pressure to increase salaries to attract workers. The data also showed that the number of employees working from home is dropping, to 7.4% in May from 7.7% the month prior.
Separately, a survey of small business owners by the National Federation of Independent Business released yesterday found that many small businesses are struggling to fill available job openings. Just over half or 51% reporting available jobs went unfilled in May, equalling a 48-year record set in September. Close to half or 49% of those businesses said they're raising compensation to attract workers, with another 25% saying they plan to raise wages within the next three months.
Businesses are hiring, wages are rising and people are beginning to get back to office, that's all good news right? Not exactly, since the data could be a double-edged sword. With the job market still strong, higher wages could drive up inflation and the Federal Reserve can continue to be aggressive about interest rate hikes. While that means inflation will likely come down, higher interest rates would make borrowing more expensive for consumers and take a bite out of corporate profits.
- Kristin
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