May Jobs Report Was Stronger Than Expected

Wages have increased 4.3% on an annual basis, and the average workweek fell to 34.3 hours.

June 05, 2023

ALEXANDRIA, Va.—Businesses in the U.S. added 339,000 jobs last month, which was more than expected by economists, reports CNBC. The Dow Jones estimated employers would add 190,000 jobs in May. This is the 29th straight month of positive job growth.

“The U.S. labor market continues to demonstrate grit amid chaos—from inflation to high-profile layoffs and rising gas prices,” Becky Frankiewicz, president and chief commercial officer of Manpower Group, told CNBC. “With 339,000 job openings, we’re still rewriting the rule book and the U.S. labor market continues to defy historical definitions.”

The unemployment rate increased to 3.7% last month; however, the labor force participation rate was unchanged. This is the highest unemployment rate since October 2022, but it’s still near the lowest it’s been since 1969.

Average hourly earnings were up 0.3% in May. Wages have increased 4.3% on an annual basis, and the average workweek fell by a tenth of an hour to 34.3 hours.

Professional and business services created the most jobs in May, with 64,000 positions, while government added 56,000 jobs. Health care contributed 52,000 positions, leisure and hospitality added 48,000, construction added 25,000 and transportation and warehousing added 24,000. Self-employed jobs decreased by 369,000 last month.

“The upshot is that the only genuine sign of weakness in the report was the decline in average weekly hours worked to 34.3, from 34.4, which left them at the lowest level since the COVID nadir in April 2020,” wrote Paul Ashworth, chief North America economist for Capital Economics.

ADP reported that private payrolls increased by 278,000, which was much higher than the Dow Jones estimate of 180,000. Annual pay was up 6.5% year over year.

"This is the second month we've seen a full percentage point decline in pay growth for job changers," said Nela Richardson, chief economist, ADP. "Pay growth is slowing substantially, and wage-driven inflation may be less of a concern for the economy despite robust hiring."

Job growth is strong, while pay growth continues to slow, reported ADP. Job changers saw a gain of 12.1%, down a full percentage point from April. For job stayers, the increase was 6.5% in May, down from 6.7%.

Gains in private employment were fragmented last month, with leisure and hospitality, natural resources and construction taking the lead. Manufacturing and finance lost jobs.