Editor's Note: This report is based on survey data from May 2024 that was published in June 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
US employers added an impressive 272 thousand jobs last month, beating the predicted figure of 185 thousand by almost 50%.
At the same time, the unemployment rate ticked back up by a tenth of a point, which is a small increase, but one that carries somewhat outsized significance as it brings the unemployment rate up to 4% for the first time in 27 months, ending the longest run of consecutive unemployment rate reports below 4% since the late 1960s.
This small upward movement in the unemployment rate also ends the 9 month streak in which the unemployment rate was within one-tenth of a point of 3.8%, but given that the unemployment rate was at 3.7% 12 months ago (and 3.6% 12 months before that) the long term stability is the more relevant takeaway.
The number of unemployed people held steady at around 6.6 million last month, which is up by about 500 thousand people over the last year from approximately 6.1 million in May of 2023.
About 21% of unemployed people are currently classified as long-term unemployed - people who have been out of work and seeking it for about 6 months or more - but approximately 40% of the increase in unemployed people over the past year can be attributed to growth in the number of long-term unemployed people.
The 272 thousand jobs last month exceeds the trailing 12 month average monthly net job increase of 232 thousand by about 17%.
The healthcare industry recorded the largest number of new job additions for the second month in a row, totalling 68 thousand jobs last month - which is slightly above the 64 thousand net jobs that the healthcare industry has averaged each month of the last year.
The government sector netted the next largest number of new jobs at about 43 thousand - which is down slightly from the monthly average of 52 thousand over the last 12 months. The leisure and hospitality industry was next on the list adding about 42 thousand jobs and outpacing the monthly average by 20%, followed by professional scientific and technical services which added about 32 thousand jobs, beating its monthly average by almost 70%.
The social assistance and retail industries each added about 14 thousand jobs as well while the employment figures in the other major industries showed no meaningful movement over the month.
The average workweek held steady at 34.3 hours per week while average hourly pay rose by 14 cent to $34.91 per hour, which is a 0.4% jump over the course of just 1 month.. Hourly wages are up 4.1% total over the last 12 months while the average number of work hours per week essentially remained unchanged over the year, down from 34.4 hours per week in May of 2023.
Mployer Advisor’s Take
The beginning of 2024 brought with it the promise that the Federal Reserve’s long sought soft landing would soon be within sight, but we are nearing the second half of the year already and the holding pattern continues.
Fed leadership will convene again next week, but virtually no experts expect that they will be cutting interest rates anytime soon at this point, and the significant wage growth seen in this latest report is likely only going to push those expectations back further into the fall and winter.
That said, the number of job openings is currently lower than it has been since February of 2021- during the peak of the pandemic before any vaccines or effective treatments became widely available - which may indicate that the job market will soon be cooling off to the degree that the upward pressure on wages will subside.
To be clear, a holding pattern during a strong labor market and solid economic performance is not a particularly bad situation to be in while we await the soft landing and some interest rate relief.
The downside of the holding pattern is getting caught in a storm, and if there are any dark clouds to look out for on the economic horizon in the meantime, they will most likely take the shape of banking issues created by reduced demand for commercial real estate, which is a problem that happens to be compounded by the higher interest rates and is a space we’ll be keeping an eye on in the months ahead.
Check out the Mployer Advisor blog here.
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