“Looking at the wage component, what we are seeing, certainly in the leisure, hospitality, construction—the areas where the labor situation is tight—substantial wages increases.”—Peter Boockvar, chief investment officer for Bleakley Advisory Group.
The shortfall in the level of payrolls, along with views that recent inflationary pressures will prove temporary, helps explain why Federal Reserve officials will hold the line on their ultra-easy monetary policy.
“Remaining steady in our outcomes-based approach during the transitory reopening surge will help ensure the economic momentum that will be needed as current tailwinds shift to headwinds is not curtailed by a premature tightening of financial conditions,” Fed Governor Lael Brainard said Tuesday.
The employment report also showed health care and education registered notable increases in jobs, while construction payrolls decreased for a second month.
In one sign of shifting demand, employment at grocery stores decreased for a third month as more people return to dining out.
Labor Participation
The labor force participation rate, a measure of those working or looking for work and closely watched by the Fed, was 61.6% in May after 61.7%. It remains well below the 63.3% before the pandemic. The employment-population ratio ticked up to 58%.
Adding workers is “one of the most important issues because it is very difficult, particularly here in the U.S., to get labor,” Christopher Nassetta, chief executive officer at Hilton Worldwide Holdings Inc., said on the company’s May 5 earnings call. “You just can’t get enough people to service the properties.”
Average hourly earnings rose 0.5% in May from a month earlier, to $30.33, the jobs report showed.
“The data for the last 2 months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages,” the Labor Department said in a statement.
Demographic Groups
• The unemployment rate for White Americans fell 0.2 percentage point, while the rates for Black Americans and Hispanic Americans declined 0.6 percentage point
• The labor force participation rate for women age 25-54 eased for a second month. The rate for men in that category was unchanged
• Overall unemployment for women dropped to 5.5%, while the jobless rate for men decreased to 6%
—With assistance from Kristy Scheuble, Liz Capo McCormick, Scott Lanman and Sophie Caronello.
This article was provided by Bloomberg News.