Hiring in the US picked up in May after a shockingly disappointing read in April, but the number of jobs created was still on the lower end of expectations.
As jobs reports go, this one is underwhelming.
Hiring in the United States picked up in May after a shockingly disappointing read in April, but the number of jobs created was still on the lower end of expectations.
The economy added 559,000 jobs last month, pulling the unemployment rate down to 5.8 percent, the US Bureau of Labor Statistics said on Friday.
The number of unemployed workers fell by nearly half a million to 9.3 million.
While joblessness is moving in the right direction, it is still well off pre-pandemic levels, when the unemployment rate was 3.5 percent and the number of unemployed persons stood at 5.7 million.
Despite that yawning gap, there are millions of jobs going begging in the US right now. Increasing coronavirus vaccination rates and rollbacks of pandemic restrictions are unleashing pent-up consumer demand for goods and services, prompting businesses to ramp up operations in earnest.
Nearly half of small business owners – some 48 percent – reported unfilled job openings last month, the National Federation of Independent Businesses said on Thursday. May marked the fourth consecutive month the gauge has shattered records and was 26 points higher than the 48-year historical reading of 22 percent.
Economists and policymakers are divided over why, in a nation awash in unemployed workers, businesses are bereft of eager job hunters.
Some Republicans are blaming the $300 federal weekly top-up to state unemployment benefits for disincentivising the unemployed to find jobs.
Twenty-five states led by Republican governors have announced plans to withdraw from federal unemployment benefit programmes, which include the weekly top-up.
But many economists believe there are other factors at play.
Some point to bottlenecks forming as millions of businesses reopen and expand operations at once. A lack of childcare options for working parents, older workers opting for early retirement and fear of contracting COVID-19 are also believed to be keeping the unemployed on the sidelines.
“As we have warned over the past month, singular narratives should be avoided,” Lydia Boussour, lead US economist for Oxford Economics, wrote in a note to clients. “The May jobs is evidence that there are still multiple labor demand and labor supply constraints at play including the virus, unemployment benefits, childcare issues and early retirements.”
One benefit of too few workers chasing too many job openings is higher wages.
Average hourly earnings for employees on private payrolls increased by 15 cents in May to $30.33. That followed an increase of 21 cents in April.
“The data for the last 2 months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages,” said the Bureau of Labor Statistics.
Leisure and hospitality businesses that were among the hardest hit by the coronavirus pandemic added 292,000 jobs last month, with food services and drinking establishments accounting for some two-thirds of that gain. But the sector is still 2.5 million jobs shy of its pre-pandemic level – and that benchmark does not account for growth in the labour force or the economy.
Public and private education continued to add jobs as schools resume in-person learning, while child and daycare services added 18,000 jobs.
Manufacturing added 23,000 jobs in May but is still down more than half a million jobs from its pre-pandemic levels. Factories are struggling to find enough workers, which helped boost the average workweek above 40 hours, with overtime increasing by up to 3.3 hours.