Employers added 139,000 jobs in May, which was more than expected and welcome news after worries earlier in the week that the jobs market was slowing.
The U.S. Bureau of Labor Statistics (BLS) reported Friday morning the 139,000 new jobs, and that the unemployment rate remained at 4.2%, despite recent reports of layoffs in the federal government and from the private sector.
Hiring decreased slightly from April’s total job growth of 147,000 but still exceeded Wall Street’s forecasts for an increase of 125,000 jobs. The news sent the Dow Jones Industrial Average up about 500 points at the opening of Friday trading.
The BLS report was welcome relief after the payroll processor ADP reported on Wednesday that private payrolls increased by a disappointing 37,000 jobs in May, the lowest monthly reading by ADP since March 2023 and a fraction of the 110,000 private-sector new jobs Dow Jones had forecasted.
Employment gains in May were strongest in the health care sector, which added 62,000 jobs in the month, higher than the average monthly gain of 44,000 over the past 12 months. The sector’s job gains were strongest in hospitals, which added 30,000 workers. Ambulatory health care services added another 29,000 jobs.
Leisure and hospitality employment increased by 48,000 jobs in May, with food service and drinking establishments adding 30,000 workers.
Federal government employment continued to decline in May, shedding 22,000 jobs, and losing 59,000 workers since January. However, the BLS pointed out that federal workers on paid leave or receiving ongoing severance pay are counted as employed. So, the actual number of federal employees leaving the workforce is much higher than the published figure.
Other job sectors losing employees included temporary help services, which shed more than 20,000 jobs, and manufacturing, which lost 8,000 workers.
Despite the generally strong monthly jobs report, analysts saw reasons for worry.
Wells Fargo economists Nicole Cervi, Sarah House and Michael Pugliese wrote in a blog that despite the May jobs report showing nonfarm payrolls increasing by 13,000 more jobs than expected, the report should be taken with caution. A combined downward revision of 95,000 jobs for the months of April and March overshadowed the better numbers. The industry composition of employment growth pointed to resilience in health care but weakness in more cyclically sensitive industries such as manufacturing, trade and temporary employment.
First American Senior Economist Sam Williamson said in a statement that the solid jobs data will disappoint the housing market looking for signs that the Federal Reserve is leaning toward cutting interest rates.
“The data supports the Fed’s view of a still-resilient labor market, likely extending the Fed’s ‘wait-and-see’ stance on rate cuts as inflation remains the top concern,” Williamson said. “Other leading indicators, like jobless claims, signal softening labor market conditions, so the June jobs report may be pivotal to prompting any Fed rate cuts in late summer or early fall.”
