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Employment: Continued Solid Gains

June 3, 2022
Bottom Line: Job gains in April were somewhat stronger than expected with solid hiring across most sectors, wages modestly higher and the unemployment rate unchanged at 3.6%. Leisure and hospitality jobs led the gains again with restaurants and hotels hiring. The only slight negative was retail trade, which shed nearly 61k, somewhat surprisingly, but that tends to be a sector where seasonal adjustments can be difficult at this time of year.
Wages were higher, though slightly below expectations. On a trend basis wage growth is still historically robust but is decelerating modestly, now running at 4.5% annualized over the last three months, well below the 5.2% pace of the last 12 months.
Overall, this was another solid labor report. Given the  Fed's focus on the strength of the labor market as a critical factor behind sustained inflation, this will do little to dissuade the notion the Fed will likely continue 50bp rate hikes in June, July, and possibly September.
Payroll Employment
rose by 390k in May, compared with market expectations for an increase of 380k. The prior 2 months were revised, higher in April by 8k and lower in March by 30k.

Government jobs
ROSE by 57k. Consequently, private sector jobs ROSE by 333k.  Private education jobs rose by 33k. State and Local education jobs rose by 51k.

Overall employment is now 4.5% ABOVE its year-ago level,  Over the past 12 months, 6,541k jobs have been created.
In May, the job gains were in:
  • Trade, Transportation & Utilities (+62k with -61k of those in Retail Trade),  
  • Professional & Business Services (+75k with the addition of 19.3k in Temp Help Services),  
  • Leisure & Hospitality (+84k),
  • Government (+57k),
  • Education & Health Services (+42k),
  • Construction (+36k),
  • Manufacturing (+18k), and
  • Information (+16k).
The Unemployment Rate was UNCHANGED in May at 3.6%, compared with market expectations for a small decline to 3.5%.
Household employment rose by 321k while the labor force increased by 330k, resulting in an increase in the number of unemployed of 9k.
The Labor Force Participation Rate ROSE by 0.1 percentage points to 62.3%.

The Employment-Population Ratio
ROSE by  0.1 percentage points to 60.1%.The number of people Working Part-Time for Economic Reasons ROSE by 239k to 4,235k. while Long-Term Unemployment FELL by 127k to 1,356k (accounting for 22.8% of the unemployed),  while the Mean Duration of Unemployment FELL by 2.5 weeks to 22.5 weeks.
There are now 6.0 million people officially unemployed. In addition, there are another 5,681k people who say they want a job but are not currently looking for one.  Finally, another 4,235k people are working part-time because of slack economic conditions.
The Index of Aggregate Hours ROSE by 0.3%, combining the solid gain in private payroll employment and the steady workweek.
Hourly Earnings ROSE by 0.3% in May, below market expectations of 0.4%. Hourly earnings are now 5.2% ABOVE their year-ago level.

Weekly Earnings
also ROSE by 0.3%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 4.3% ABOVE their year-ago level.

The Average Workweek
was UNCHANGED at 34.6 hours, BELOW the market consensus at 34.7 hours.
Article by Contingent Macro Advisors