MNI DATA IMPACT: US Unemployment Rate Hits Pandemic Low in May

U.S. job growth disappointed again in May, the Bureau of Labor Statistics said Friday, but the unemployment rate slid to a new pandemic low after April saw the first uptick in a year.

Employers through the month added 559,000 jobs, falling short of the 655,000 increase forecast by the Bloomberg consensus, but more than doubling April's revised 278,000 gain (prev +266,00).

Total private payrolls rose 489,000 through May when markets had expected an increase of 600,000. Notable job gains came from leisure and hospitality (+292,000), state and local government education (+103,000), health care and social assistance (+45,800), and private education (+41,000). Government payrolls were up 67,000.

SUBDUED

Gains in other industries were mostly subdued, and job growth declined in construction (-20,000), transportation and warehousing (-5,800), and financial activities (-1,000).

Industry experts told MNI this week that a shortage of available workers that held back employment gains in April likely carried over into May, but some hesitant workers could have been enticed back by higher wages offered by employers struggling to hire.

Average hourly earnings were up 0.5% through May, much stronger than the 0.2% gain that had been forecast by Bloomberg. From a year earlier, hourly wages were up 2%, and the length of the average workweek fell by a tenth to 34.9 hours.

UNEMPLOYMENT RATE

Meanwhile, the unemployment rate shot down to 5.8%, beating expectations for a drop to 5.9%.

Among the unemployed, the number of people on temporary layoff fell 291,000 to 1.8 million, down from 2.1 million in April. The number of permanent job losers declined by 295,000 to 3.2 million, down from 3.4 million last month.

The median duration of unemployment dropped to 19.9 weeks from 22.2 weeks in March. Long-term unemployment, or those jobless for six months or more, fell to 3.8 million, down considerably from 4.2 million in April and accounting for 40.9% of the total unemployed. That's an improvement over last month when long-term unemployment made up 43% of total unemployment, though former Bureau of Labor Statistics Commissioner Katharine Abraham told MNI that that's still likely to overtake the record 45% seen following the Great Recession.

The U-6 rate, which accounts for discouraged workers, fell to 10.2% from 10.4% in March.

The number of people not in the labor force who currently want a job was unchanged at 6.6 million, up 1.6 million from last February. These individuals were not counted in the official unemployment rate because they were not actively looking for work sometime in the last four weeks.

But the participation rate stumbled in May, ticking down by a tenth to 61.6% from 61.7% in April. The employment-population ratio improved through the month, increasing to 58 from 57.9 in April.