The Jobs Report Was Surprisingly Good (But What Does It Mean for You?)
Yesterday, economists were predicting that today’s jobs report from the labor department would show the addition of around 185,000 jobs in May. The actual numbers from this morning’s jobs report were a shocker: 272,000 jobs added in various industries including healthcare, government, leisure and hospitality, and professional services.
The unemployment rate ticked up to 4% while other measures of employment, including the number of long-term unemployed, the labor force participation rate, and the employment-population ratio, changed little last month.
What It Means for Job Seekers
If you’re one of the long-term unemployed or have been trying to change jobs for a while now, these numbers are frustrating. The job market seems to be strong, so why isn’t it easier to find a job?
With the caveat that one month’s data doesn’t represent a trend, you can find some hints about what’s going on by looking at both this report and Wednesday's report from payrolls processor ADP. The BLS report and the ADP report famously tend to mismatch. In part, this is because the BLS report includes two surveys, household and establishment, while the ADP surveys only employers (establishments). The BLS report also includes government employment data, while the ADP includes only the private sector.
However, this month, both reports showed that hiring was stronger in the services sector than the goods sector. ADP showed only the addition of 152,000 jobs, but those jobs were concentrated in trade/transportation/utilities, education, and health services. Manufacturing shed 20,000 jobs per the ADP report, while mining shed 9,000 jobs. In the goods category, only construction added jobs (+32,000).
The BLS report, meanwhile, showed that hiring was flat in mining, construction, and manufacturing, as well as several service-based industries.
Nela Richardson, chief economist at ADP, sums it up: “Job gains and pay growth are slowing going into the second half of the year. The labor market is solid, but we're monitoring notable pockets of weakness tied to both producers and consumers.”
The monthly Job Openings and Labor Turnover Survey from the labor department also reflected a concerning trend. While job openings were essentially flat for the April (the most recent data available), they declined 1.8 million over the year.
Further, there appears to be a mismatch between the industries that are laying off workers and the industries that are hiring. For example, over 519,000 tech workers have lost their jobs to layoffs since the start of 2022, according to layoffs tracker Layoffs.fyi. Job openings in healthcare, retail trade, and government—the three biggest sectors in 2023, employment-wise, according to Barron’s analysis—won’t be much help to those workers.
What Experts Are Saying
“It’s quite remarkable, actually, the number of times that economists have forecasted a sharper downturn only to be proven wrong by a blockbuster number—though the very high ones have often been shaved down by revisions.” –Lydia DePillis, The New York Times
“The unemployment rate rising is causing some jitters for labor economists worried about a cooling labor market slipping into a downturn. Technically, the unemployment rate was 3.96% and therefore rounds up 4%. But, directionally, there may be more cause for concern for the jobs outlook than this time last year.” –Talmon Joseph Smith, The New York Times
“On the surface, [the report] was hot, but you’ve also got a bigger drop in household employment. For what it’s worth, that tends to be a more accurate signal when you’re at an inflection point in the economy. You can find weakness in the underlying numbers.” –Liz Ann Sonders, chief investment strategist at Charles Schwab, CNBC
“We’re certainly seeing, within firms, that the hire rate among more costly or higher-paid workers has been going down. …If you’re a high-wage worker right now and you’re sitting on the sidelines, the job search may take some time.” –Fiona Grieg, global head of investor research and policy at Vanguard, NBC News
Just Give Me the Data, Please
The Employment Situation Summary by the numbers:
Total nonfarm employment: +272,000 jobs
Unemployment rate: 4%
Long-term unemployed: 1.4 million
Labor force participation rate: 62.5%
Employment-population ratio: 60.1%
People employed part time for economic reasons: 4.4 million
Average hourly earnings: Increased by 14 cents (0.4%) to $34.91
Industries that added jobs:
· Healthcare (+68,000 jobs)
· Government (+43,000 jobs)
· Leisure and hospitality (+42,000)
· Professional, scientific, and technical services (+32,000 jobs)
· Social assistance (+15,000 jobs)
· Retail trade (+13,000 jobs)
Industries that showed little change in employment:
· Mining, oil and gas extraction
· Construction
· Manufacturing
· Wholesale trade
· Transportation and warehousing
· Information
· Financial activities
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