The unemployment rate was unchanged at 3.6 percent.
Average hourly earnings rose at an annualized rate of 5.5 percent, below the 8.5 percent inflation rate, indicating that employees are losing money. On a month-over-month basis, average hourly earnings edged up 0.3 percent, or 10 cents, to $31.85. Average weekly hours held steady at 34.6. The labor force participation rate dropped 0.2 percentage points to 62.2 percent.
The employment gains were broad-based, led by leisure and hospitality (78,000), education and health services (59,000), manufacturing (55,000), and transportation and warehousing (52,000).
Professional and business services added 41,000 positions, while financial services created 35,000 new jobs. Retail trade picked up 29,200 jobs. and government jobs rose by 22,000.
President Joe Biden in a statement on May 6 touted his “record-setting job creation” since taking office.
“This is a direct result of the American Rescue Plan, our COVID vaccination program, and my plan to grow our economy from the bottom up and middle out,” he stated.
Several details in the jobs report fell short of estimates, according to analysts, signaling the possibility of future employment growth slowing.
“The unemployment rate was unchanged at 3.6% versus expectations for another decline to 3.5%, and the labor force participation rate slipped to 62.2% versus consensus expectations it would improve to 62.5% from 62.4% in March,” Scott Anderson, chief economist at Bank of the West, wrote in a report.
Total non-farm payroll employment for February was revised down by 36,000 to 714,000. March numbers were revised down by 3,000 to 428,000.
The real unemployment rate, another labor measurement that monitors discouraged workers and individuals working part-time jobs, rose to 7 percent.
Stocks closed lower on May 6 after a week when the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite Index encountered sharp swings.
The U.S. Treasury market was mostly in the red, with the benchmark 10-year yield down 1.5 basis points to 3.053 percent. The one-year bill edged up to 2.042 percent, while the 30-year bond dropped to 3.147 percent.
A Wave of Labor Data
Payrolls processing firm ADP reported last week that private payrolls rose by 247,000 in April, below the market forecast of 390,000.The National Employment Report, created with Moody’s Analytics, found that small businesses posted job losses last month, shedding 120,000 positions. Large companies added 321,000 jobs, while medium-sized firms added 46,000 jobs.
“In April, the labor market recovery showed signs of slowing as the economy approaches full employment,” Nela Richardson, the chief economist at ADP, said in a statement.
But some don’t believe it is a reliable indicator for the monthly jobs report from the BLS.
“The ADP private payroll number came out weaker than expected,” Carlos Legaspy, the president and CEO of Insight Securities, told The Epoch Times. “However, this number is traditionally volatile and not a good indicator of the upcoming official employment data.”
Initial jobless claims unexpectedly jumped to 200,000 in the week ending April 30, higher than the median estimate of 182,000. Continuing jobless claims came in at a lower-than-expected 1.384 million, while the four-week average, which removes week-to-week volatility, climbed to 188,000.
Another notable event occurred recently in the job market.
In the first quarter, worker productivity declined 7.5 percent, the fastest drop since the third quarter of 1947. Meanwhile, unit labor costs spiked 11.6 percent—a gauge of salary and benefits per unit of output—the largest increase since the third quarter of 1982.
Did more Americans relax at the office knowing that their employers are desperate for workers?
Not necessarily, experts say.
The one thing that happened in the first three months of 2022 was the Omicron wave. The outbreak in infections caused millions of people to call in sick, prompting businesses to respond by scaling back operations. This, observers note, has been the case throughout the coronavirus pandemic.
“The productivity and costs numbers are always volatile but they have been wild since COVID struck, so the noise in each quarterly print overwhelms the signal,” Pantheon Macroeconomics Chief Economist Ian Shepherdson wrote in a note to clients on May 5.
Jobs and the Economy
According to a recent Fitch Ratings report, the United States is expected to recover all jobs lost in the COVID-19 public health crisis sometime in the third quarter.Fitch’s analysis, which was first shared with CNN, noted that all states except Hawaii and Louisiana had recovered at least 70 percent of the jobs lost at the height of the pandemic. Moreover, 13 of those states, including Arizona, Florida, and Georgia, have seen their employment levels return to pre-crisis levels.
The employment trends of the past 12 to 15 months suggest that the U.S. economy has moved on from the coronavirus pandemic, WalletHub analyst Jill Gonzalez says.
“Job growth, in combination with less mask and vaccine mandates nationwide, should spur even more economic recovery,” she said in a report.
Because the labor market has been red hot and remains exceptionally tight, the jobs arena “can afford to weaken a little bit and still be at full employment,” Legaspy said.
In the months ahead, there could be more of a focus on the labor force participation rate as more adults quit the labor force and enter early retirement. Also, despite wage growth soaring, inflation has wiped away workers’ gains in earnings, which could act as a deterrent.
“Why would they go back to work if they won’t see real returns on their labor? Unless, of course, they must go back to make ends meet,” the report stated.
Although the labor market is sizzling, the U.S. economy could be slowing down after contracting 1.4 percent in the first quarter.
Meanwhile, two-thirds of institutional investors believe a recession could arrive before the end of 2023, up from 56 percent in April, a Goldman Sachs Global Markets Division’s Marquee QuickPoll found.
The monthly survey revealed that investors think an economic downturn is necessary to cool inflation.
Others suggest that the United States could be facing stagflation, a period of stagnant economic growth, high inflation, and rising unemployment.
Paul Ashworth, chief U.S. economist at Capital Economics, believes the United States will avert a recession, although growth prospects are constrained.
The next major economic report will be the April inflation rate due on May 11.
