May stays on trend and the US economy continues to exceed expectations

This May marked the 14^th consecutive month where job growth blew past the expectations of Wall Street economists. The latest report from the Bureau of Labor Statistics revealed that the US economy added 339,000 jobs last month (vs. 195,000 expected), further cementing the resiliency of the labor market.

Employment gains were also revised higher for the past two months meaning there were more jobs added in March and April than previously reported. Despite interest rate hikes from the Federal Reserve, the US economy has refused to slow, setting up predictions for a strong summer and avoiding a potential recession.

Unemployment ticks up slightly

Job openings and unemployment both increased for the month of May. While job openings reached 10.1 million last month, the rate of unemployed individuals rose by .03 percentage points to 3.7%. As more Americans are returning to the jobs market, we can expect less competition for skilled candidates.

This increase in the unemployment rate may also keep the Federal Reserve from raising interest rates further in June. The central banking system has famously remarked in the past that they’d be willing to trade higher unemployment for lower inflation, so this increase (alongside the fact that they’ve already increased rates 17 times in just two years) signals to economists that current rates will hold for the coming month.

Among the major working groups, the unemployment rate only rose for adult women (3.3%) and Black workers (5.6%).

Construction grew considerably

While it wasn’t the industry with the biggest numbers, the construction sector saw major gains in May. Despite averaging just 17,000 jobs added per month over the last 12 months, May saw 25,000 jobs added: a 47% increase for the industry.

The sectors that added the most jobs last month include healthcare and social services (+74,600 jobs), professional and business services (+64,000 combined), and government (+56,000). No major sectors were reported to have negative job growth for the month.

Stock market futures rise

In another signal that the US has avoided a recession, the stock market futures reacted positively to the latest job report findings and recent Senate passage of the debt ceiling bill. Futures associated with both the S&P 500 and Dow Jones rose by 0.6%, while Nasdaq futures also increased by 0.3%. Since January 2023, Nasdaq futures have increased by 25%, and Dow Jones futures have seen almost a 10% increase. Futures for S&P 500 have seen little change since the start of the year.

Higher stocks and a higher debt ceiling have put American investors at ease, spurring spending and putting the Federal Reserve’s hopes for a “soft landing” within reach. If the economy keeps performing as it has for the past few months, economic experts expect the jobs market to remain resilient through the summer.

Adecco is here to help

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