May’s jobs report may serve as a barometer of sorts for viewing the current U.S. economic environment, with the rate of hiring falling to its lowest level in more than a year but still exceeding economists’ expectations.
Nonfarm employers added 390,000 new jobs during the month, down from the revised estimate of 436,000 added in April. The slowdown comes as the economy continues to grapple with heightened inflation, with the Federal Reserve deploying proactive measures to stem the tide with multiple hikes of its baseline interest rate this year.
But the headline figure, in a vacuum, is a strong one. Economists surveyed by Reuters had projected a gain of 325,000 jobs in March, and in the decade through the end of 2019, monthly employment increases averaged 183,000.
Employers have now recouped an average of nearly 850,000 jobs per month since the big job losses of early 2020, when the COVID-19 pandemic was in its earlier stages. The labor market now stands roughly 822,000 jobs short of its pre-pandemic level in February 2020.
“With May’s increase, the U.S. economy has now regained 96% of the jobs lost in the pandemic,” said Odeta Kushi, deputy chief economist at First American Financial Corp. “If gains continue at the May pace, we could return to the pre-COVID employment peak by August.”
Gains were strong in the hospitality and leisure sector, which added 84,000 new jobs during May, including 46,000 at food and drink establishments and 21,000 in lodging. Professional and business services added another 75,000 jobs, while the strength of e-commerce continued to fuel growth in transportation and warehousing employment, which added 47,000 positions in May.
Construction employment grew by 36,000 in May, a welcome influx after the sector saw no change in April. Kushi called May’s news “a solid jobs report for construction.”
“Residential building construction employment increased by 5,000 in May, while nonresidential added 2,400 jobs,” she noted. “Residential building is up 7.6% compared with pre-pandemic levels, while nonresidential building remains 5% below. More hammers at work, more homes.
“In May, job gains were highest for specialty trade contractors, which added 17,000 jobs, and heavy and civil engineering construction, which added 11,000 jobs,” she added. ”Construction employment is 40,000 higher than it was in February 2020.”