U.S. Jobs: Job Creation, Unemployment = Steady as She Goes
It’s the first Friday of the month, and the usual day for the US Bureau of Labor Statistics to issue its monthly jobs and unemployment numbers. This latest report covers May, and comes as close to a "steady state" set of figures — almost ho-hum, in fact — as I’ve seen since the pandemic struck like a thunderbolt in March and April of 2020.
Unemployment remains unchanged at a historically low 3.6 percent, and 390,000 jobs were added for May. That 3.6 percent figure has held for three months now, along with the BLS estimate of more than 6.0 million unemployed overall.
As the report itself observers "These measures are little different from their values in February 2020 — 3.5 percent and 5.7 million, respectively — prior to (onset of) the coronavirus (COVID-19) pandemic."
Looking at Some Details
On the jobs creation side of things, 390,000 falls somewhat below recent averages, following a monthly run rate that the Washington Post right calls out as "nearly 12 months of at least 400,000 new jobs." Overall employment is still down by 822,000 (0.5 percent) from its February 2022 levels, nearly on par with pre-pandemic numbers.
As for where those jobs were added in May, here’s a recap:
Leisure and hospitality added 84,000 jobs, of which 46,000 went to food services and drinking establishments, and another 21,000 to accommodation. This sector is one of the few that remains down substantially from February 2020 levels: It’s still short by 1.3 million jobs (7.9 percent).
Professional and business services grew by 75,000 jobs, of which accounting and bookkeeping scored 16,000, computer systems design and related services added 13,000, and scientific R&D services absorbed 6,000. This sector is a neg gainer, up by 821,000 jobs vis-à-vis February 2020.
Transportation and warehousing picked up 47,000 more jobs, of which warehousing and storage grabbed 18,000, truck transport rolled up 13,000, and air transport soared to 6,000. This sector is likewise on the upside, with 709,000 more jobs in May 2022 than in February 2020.
Construction, which is a frequent yo-yo in these reports, is up by 36,000 jobs, with 17,000 going to specialty trade contractors, and 11,000 to civil engineering construction. This sector is more modestly ahead, with 40,000 jobs more than in February 2020.
State government and private education both added jobs in May, with 36,000 going to state government and 33,000 going to private education. Compared to February 2020, state government education is up by 27,000, while private education is essentially on par. Local government education, which includes most local public schools in the United States, remains down from pre-pandemic levels by 308,000 jobs (3.8 percent).
Healthcare numbers grew by 28,000, with most of that (16,000) going to hospitals. Overall, healthcare employment is down by 223,000 jobs (1.3 percent) compared to February 2020.
Manufacturing added 18,000 jobs, of which fabricated metal products had a 7,000 share, wood products a 4,000 share, and electronic instruments a 3,000 share. Overall manufacturing has almost caught up to pre-pandemic levels, down by 17,000 jobs (0.1 percent) compared to February 2020.
Wholesale trade added 14,000 jobs, of which 10,000 went to durable goods, and another 6,000 to electronic markets, agents, and brokers. In this sector, employment remains slightly down by 41,000 jobs (0.7 percent) vis-à-vis February 2020.
Mining added 6,000 jobs. It is 80,000 jobs ahead of a recent dip in February 2021.
Retail trade dropped 61,000 jobs in May, but it is still 159,000 jobs ahead of February 2020 levels.
Other major sectors — namely, the GoCertify crowd's home sector of information, as well as financial activities and other services — were mostly flat for May.
Wages continue to grow but still aren’t keeping pace with inflation. May showed an increase of $0.10 per hour (0.3 percent) to $31.95. Wages are up between 5 and 6 percent for the past 12 months, but the most recent published inflation rate currently stands at 8.3 percent.
Upward pressure on wages is strong in what many labor economists describe as “a tight labor market,” with lots of “Help Wanted” signs up all over the place, in windows and online. The Post reports that “there are two open positions for every job seeker, with many businesses — particularly in lower-wage sectors such as retail and hospitality — complaining of widespread labor shortages.”
Another data point: The same day my 18-year-old son decided to look for a summer job, he found work in a nearby Asian hypermart’s food court, where a couple of his classmates already work.
Where to from here?
My gut feel is that we’ve entered a phase where attempts to control inflation, along with a shrinking supply of available workers, will put a cap on job growth. I’m thinking we may be seeing the 3.6 percent unemployment figure for some time to come, with job creation in the 250,000-to-350,000 monthly range likewise.
Am I too much of an optimist? Maybe: Ukraine and the somewhat associated world food shortage remain wild cards in this mix. If the war heats up, or famine strikes in Africa (as it appears likely to do), then things could change in a hurry. Stay tuned, and I’ll keep you posted.