US employers increased hiring in May and raised wages amid competition for workers, while millions of unemployed remain at home, likely due to childcare problems and generous unemployment checks.
The employment report released Friday by the Labor Department provided some assurances that the economic recovery from the pandemic recession is underway, after the labor shortage was also blamed on persistent COVID-19 fears that restricted drastically job growth in April.
Some economists and investors have lamented stagnant growth as inflation accelerates. The economy is being sustained by an improvement in the public health situation and a massive fiscal stimulus.
“There are still a lot of unemployed, but there doesn’t seem to be much desire to work,” said Chris Low of FHN Financial in New York. “There would have been a lot more hires if employers could find more workers.”
Nonfarm payrolls increased 559,000 jobs last month. The April figure was revised slightly up to show that payrolls grew by 278,000 instead of the 266,000 previously released.
That left employment around 7.6 million below its February 2020 peak. Economists polled by Reuters had forecast the creation of 650,000 jobs in May. Some 9.3 million people were officially classified as unemployed last month.
The sectors that were most severely damaged by trade restrictions to stop the virus made up most of the advance last month: leisure and hospitality added 292,000 jobs, two-thirds of them in businesses such as bars and restaurants.
Accommodations added 35,000 jobs, and entertainment, gaming, and recreation companies added 58,000 more.
However, this sector still has 2.5 million fewer jobs compared to February 2020, according to the report.
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With a record 8.1 million jobs to fill, employers are raising wages. Average hourly wage increased 0.5% (15 cents) to $ 30.33, after skyrocketing 0.7% (21 cents) in April. That brought the annual wage increase to 2% from 0.4% in April.
A sustained wage hike could strengthen the argument among some economists that high inflation could be more durable than transitory, as Fed Chairman Jerome Powell currently envisions.
The unemployment rate fell to 5.8% from 6.1% in April. This measure has been underestimated by people who are wrongly classified as “employed but absent from work.” Without this problem, the rate would have been 6.1%.
With information from Reuters and AFP
