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May's Job Growth Crushes Expectations, Adding 339,000 Jobs

June 2, 2023
minute read

According to the May jobs report released on Friday, the US economy demonstrated its continued strength by creating over 300,000 jobs last month, despite a rise in the unemployment rate to 3.7%. Data from the Bureau of Labor Statistics revealed that the US added 339,000 nonfarm payroll jobs in May, surpassing the expectations of Wall Street economists. This marks the 14th consecutive month of job creation surpassing expectations and represents the largest monthly increase since January.

The report's release comes shortly before the Federal Reserve's upcoming policy meeting, with investors still anticipating a pause in the central bank's rate hiking campaign due to the surprising resilience of the labor market. Data from the CME Group indicates a 70% chance that the Fed will maintain rates unchanged in the range of 5% to 5.25%.

Morgan Stanley's chief US economist, Ellen Zetner, noted that while the report's payroll numbers were undeniably strong, they may not be sufficient to prompt a rate hike in June. However, she emphasized the increased risk of a hike in July, as the Federal Open Market Committee (FOMC) will consider multiple factors, including the unemployment rate.

Here are the key figures from the report estimates:

  • Nonfarm payrolls: +339,000 vs. +195,000
  • Unemployment rate: 3.7% vs. 3.5%
  • Average hourly earnings, month-on-month: +0.3% vs. +0.3%
  • Average hourly earnings, year-on-year: +4.3% vs. +4.4%
  • Average weekly hours worked: 34.3 vs. 34.4

The report also revealed upward revisions in employment gains for the previous two months. April witnessed 41,000 more jobs created than initially reported (294,000 total), while March's job gains were revised to 217,000 from 165,000, resulting in a net increase of 93,000 jobs over the two-month period.

Among industries, the most significant job growth occurred in the business and services sector, which added 64,000 jobs. The government sector contributed 56,000 jobs, and the healthcare industry added 52,000 jobs in May. Leisure and hospitality experienced an increase of 48,000 jobs, with 33,000 of those positions stemming from food services and drinking places. The construction sector added 25,000 jobs, surpassing its 12-month average by 7,000 positions.

President Biden expressed satisfaction with the jobs report, stating, "Today is a good day for the American economy and American workers."

Despite recent robust economic data prompting some economists to advocate for a rate hike by the Federal Reserve in June, others believe that the increased unemployment rate and slowing wage growth indicate a gradual cooling of the economy. 

Nancy Vanden Houten and Ryan Sweet from Oxford Economics highlighted the conflicting data between the household survey and the report, suggesting that the Fed may maintain a steady policy at the upcoming meeting.

 However, they noted that a resumption of rate hikes in July is a strong possibility if job growth does not significantly decelerate in June.

Bryan Curtis
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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