MANHATTAN (CN) – The U.S. economy added 172,000 jobs in May, eclipsing expectations and showing the labor market is not taking a hit, reports showed Friday.
The print was well above the 115,000 jobs added in April and more than double the median forecast of 80,000 jobs. As expected, the unemployment rate remained at 4.3%, according to release from the Bureau of Labor Statistics.
Reviews of the two previous labor reports were also positive. The March jobs report was revised up by 29,000 jobs, while the April report saw an increase of 64,000 jobs. The combined changes show that the labor force has consistently added at least 170,000 jobs per month over the past three months.
Some sectors saw significant job growth. Leisure and hospitality gained 70,000 jobs in May, a big increase from the previous month’s gain of 14,000 jobs, and restaurants and bars grew by 48,000 jobs. However, many other sectors, including manufacturing, construction and warehousing, saw little or no job additions.
Surprisingly, the government saw an increase of 52,000 jobs last month; Experts warn that the increase is likely to be a one-off and could be wiped out by revisions.
Aside from the 22,000 jobs lost in the financial sector, this employment report does not yet show that artificial intelligence is having a noticeable impact on the workforce.
“Artificial intelligence may eventually destroy jobs, but that time is not now,” said Jamie Cox, managing partner at Harris Financial Group. “It’s also very difficult to stay anchored in a stagflation narrative when growth and employment are rising.”
ADP’s monthly private payrolls report also came in better than expected, as 122,000 jobs were added last month, compared with the 111,000 most analysts had forecast.
The gains were mostly split between smaller companies and larger mid-sized businesses of 50 to 250 employees, gaining just 17,000 positions. However, almost all sectors saw gains, with only information and natural resources/mining losing.
“Employment was broader in May than we’ve seen in recent years,” said Nela Richardson, ADP’s chief economist. “The job market continues to show steady momentum heading into the summer hiring season.”
The three-month average of private sector job gains is now just under 100,000, but some experts worry about the looming toll from the Iran conflict.
“The increased uncertainty from the war will show up in the data with a lag, as delayed or canceled expansions in the number of employees by firms will not show up immediately,” wrote Matthew Martin, senior US economist at Oxford Economics, in an investor note. “Fiscal stimulus has outweighed the drag from higher energy on consumer spending so far, but that balance will begin to shift.”
Job openings also saw a notable increase in April, rising to 7.6 million from 6.9 million in March, the highest point since mid-2024, according to the monthly. JOLTS report. The dropout rate fell to 1.9%, the lowest since 2014, excluding the Covid pandemic.
That’s not to say there aren’t cracks in the labor market, as most jobs were concentrated in the “professional and business services” sector, which had fallen by 256,000 openings a month earlier. Excluding that sector, the hiring, attrition and layoff rates all fell from March.
The BLS also noted in a special release that unemployment rates are higher year over year in 200 of 387 metropolitan areas nationwide, and that overall payrolls remained essentially unchanged in 379 of those areas.
An employment survey by the National Federation of Independent Business also reported its third straight decline, and the number of small businesses reporting jobs they couldn’t fill fell to the lowest level since May 2020.
“Concerns about rising labor costs rose sharply to the highest reading in the survey’s history,” NFIB chief economist Bill Dunkelberg said in a statement. “Small business owners are facing increasing pressure to retain workers, and many firms are navigating costly new state mandates.”
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