Job Growth and Openings Increase, But Cracks Begin to Appear

Job growth reaccelerated in May with employers adding 339,000 jobs, primarily in six industries, but the unemployment rate increased from 3.4% to 3.7%, its highest since October 2022.

The African American unemployment rate jumped to 5.6%, but monthly numbers can jump around in the BLS household survey and the record low last month may have been a statistical fluke.

Gains in just six industries: Professional and Business Services (+64,000), Health Care (+52,400), State and Local Government (+49,000), Leisure and Hospitality (+48,000), Private Education Services (+22,300), and Social Assistance (+22,200) all saw job growth. There was very little job growth in all other major industry groups.

Pay gains slow a bit further. Average hourly earnings were up 4.3% in May from a year ago, but down from the 5.9% wage gain we saw in March 2022.

Job openings rose, but only in four industries: Construction, Retail Trade, Transportation and Warehousing, and Health Care/Social Assistance.

Outlook: The job market has enough momentum to sustain consumer spending and the economy into the fall. Travel and vacation-related hiring appears to be reaccelerating going into the summer and immigration appears to be impacting the job gains in the Social Assistance industry and State and Local Government.