The Bureau of Labor Statistics (BLS) reported that nonfarm payrolls rose by 339,000 in May 2023, in line with the average monthly gain of 341,000 over the prior 12 months, but above the upwardly revised gain of 294,000 in April and 217,000 in March. Market expectations had called for a gain of 195,000 jobs. Of note, revisions added 93,000 positions to total payrolls in the previous two months.
Healthcare added 52,000 jobs in May, like the average monthly gain of 50,000 over the prior 12 months. Employment in nursing care facilities grew by 2,900 jobs from last month and 54,000 from year-earlier levels and stood at 1.402 million positions. Jobs increased by 1,700 positions in CCRC and assisted living facilities in May and were up by 55,600 from year-earlier levels to 946,600 jobs.
Separately, the BLS also reported the unemployment rate rose to 3.7% in May, up from 3.4% in April when it stood again at its lowest level since 1969. The May level was the highest since October of 2022, but notably, the rate has hovered between 3.4% and 3.7% since March 2022. The increase in the jobless rate reflected an increase in the civilian labor force (130,000) coupled with a decline in household employment (310,000). The unemployment rates peaked at 14.7% peaked in April 2020 at the height of the pandemic.
Average hourly earnings for all employees on private nonfarm payrolls rose by $0.11 in May to $33.44 or up 0.3% from the prior month. This was an increase of 4.3% from year-earlier levels, slightly less than in March at 4.4%.
Today’s report is a bit mixed, with wage growth moderating, but still strong, the labor market weakening per the rise in the unemployment rate but offset by the large increase in payroll jobs. Its likely that the Fed will “skip” an increase in the fed funds rate at its upcoming June 13th and 14th FOMC meeting as it pauses to see how the large and frequent rate hikes in the past 15 months take hold and as it waits to see if there is further fallout in the banking system. The Fed has raised the fed funds rate 5 percentage points to a range of 5.0% - 5.25% since March 2022 in an effort to combat inflation. This is the highest rate in 16 years. The Fed is looking for evidence of a softer labor market to help ease wage pressures and prevent a wage/price inflationary spiral from occurring.
The underemployment rate was 6.7% versus 6.6% in April. Among the major worker groups, the May unemployment rates were 3.3% for adult women, adult men (3.5%), teenagers (10.3%), Whites (3.3%), Hispanics (4.0%), Blacks (5.6%), and Asians (2.9%). The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.2 million in May. These individuals accounted for 19.8% of all unemployed people. The labor force participation rate held steady at 62.6% in May, unchanged from April and up from 62.5% in February, which followed three prior monthly increases in the rate. It was below the February 2020 level of 63.3%, however.