The U.S. economy added modestly fewer-than-expected new jobs last month, the Labor Department said Friday, while wages surged 2% from last year, compounding forecasts while underscoring the challenge employers face in brining workers back into the market over the final months of the pandemic.
The Bureau for Labor Statistics said 559,000 new jobs were created last month, lead by gains in leisure and hospitality, with headline unemployment rate edging fell to 5.8% from 6.1%. The May tally was modestly lower than the market forecast of 650,000.
The BLS also revised its April jobs addition estimate to 278,000 from 266,000 and noted that hourly wages were up 0.5% on the month, and 2% on the year, both figures coming in ahead of Street forecasts.
"With the majority of the gains coming from the leisure and hospitality sector and average hourly earnings increasing by 0.5%, the slack in the labor market may be smaller than the Fed’s original assessment," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "In addition, with the labor force participation rate ticking lower to 61.6% it appears like employers may need to offer up more incentives to entice workers to fill the record number of job openings that are out there."
Earlier this week, a reading of private sector job growth from payroll provider ADP indicated a stronger-than-expected 978,000 new positions were created last month, while the Labor Department's tally of weekly jobless claims fell to a post-pandemic low of 385,000 for the period ending May 22.
"Hiring is at the highest level that we’ve seen in the last four years, however a full recovery is being held back by a shortage in job candidates and their hesitance to get back into the labor force," said Andrew Hunter, co-founder and economist at job search group Adzuna.
"With federal unemployment benefits due to expire after Labor Day and a handful of states already attempting to coax candidates back by paying for workers’ hiring bonuses, it’s very likely that the recovery will pick up over the next few months.