Consumer outlooks on job availability worsened in May, even with government estimates of job growth last month exceeding economists’ forecasts by double.
In fact, optimism about finding a new job fell to its lowest level since December, according to survey results published Monday by the Federal Reserve Bank of New York’s Center for Microeconomic Data, which underscored a mismatch between the statistical resilience of the labor market and how consumers see it.
The New York Fed’s monthly Survey of Consumer Expectations revealed that the mean “perceived probability” of landing a job after a job loss declined by 2.3 percentage points in May to 43.7%, below the 12-month trailing average of 46.8%.
Respondents’ perceived probability of losing their jobs over the next 12 months only rose by a half-point to 15.1%, but the survey also revealed an uptick in consumers’ perceived probability of leaving their job voluntarily over the next 12 months, which rose to 20.8% in May from 18.2% in April and 15.9% in February.
The latest Bureau of Labor Statistics (BLS) data shows U.S. employers added jobs at an average monthly pace of 188,000 over the three months spanning March, April and May, the fastest three-month clip in nearly two years.
Roughly 172,000 jobs were added in May, concentrated in healthcare, leisure and hospitality, and local government sectors. That concentration underscores how some workers in specific sectors might feel like job conditions are loosening three months into the Iran war that started in late February.
But below the surface, wage growth fell in May as inflation continued to surge amid ongoing global energy and trade shocks linked to the near-complete closure of the Strait of Hormuz. Inflation concerns have quickly tilted the policy focus of Federal Reserve officials — who have a dual mandate to achieve maximum employment and price stability — to the inflation side of that mandate.
Meanwhile, job gains last month reflect shifting job growth “from higher-paid to lower-paid sectors over the past year,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association, commenting on the monthly figures to Scotsman Guide when they were released last week.
Separate reporting from the BLS on labor conditions in April provide an even more complete backdrop for consumers’ job anxieties in May. Though job openings in the U.S. increased to their highest level in nearly two years in April, the pace of hiring was 0.3 percentage points slower than March and more than 5% slower than one year earlier.
Across all education levels, the New York Fed’s survey findings indicate reduced optimism in finding a job in three months if a job were lost today. The sharpest drop came from respondents with high school diplomas or less education, whose average perceived likelihood of finding a job fell four percentage points, from 42.4% to 38.3%.
The steepest decline in job finding prospects was also concentrated among the lowest-paid respondents in the bank’s survey, with those making less than $50,000 annually reporting a notable drop to 34.6% in May from 40.5% the previous month. Those earning between $50,000 and $100,000 reported a decline from 47% to 45.9%, compared to a dip from 49.5% to 49.1% for those earning more than $100,000.
The unemployment rate held steady at 4.3% in May. While the perceived probability that the jobless rate would be higher by next May declined across all income brackets, expectations remained flat among those with some college education or greater and fell among those with high school diplomas or less.
Only those earning under $50,000 reported a higher perceived likelihood of losing their job in the next year, however, with the rate rising from 15.4% to 17.9%.
More respondents in the West and Midwest said in May’s survey they expect a higher jobless rate a year from now, while respondents in the Northeast reported a decline from 48.2% to 43.5% in their perceived likelihood of a higher unemployment rate. The likelihood of a higher unemployment rate fell slightly among respondents in the South.
