Total nonfarm payroll rose by 172,000 jobs in May, according to the U.S. Bureau of Labor Statistics, beating private employer estimates. Unemployment remained unchanged at 4.3%.
The May report revised March and April’s numbers up a total of 93,000 jobs, indicating growth was stronger than previously thought.
“Storm clouds still loom on horizon with rising energy prices and uncertainty, but for now, the market is giving more reasons for optimism than alarm,” Daniel Zhao, chief economist for Glassdoor, said in a statement.
But the jobs market is increasingly becoming a tale of two realities, according to Laura Ullrich, Indeed’s director of economic research. While layoffs and the unemployment rate remain low, so do hire and quit rates, Ullrich said, and the overall share of unemployed workers who have been out of work for 27 weeks or more rose to 27.5% in May, up 7 percentage points from a year ago and “well above pre-pandemic norms.”
“The headline continues to obscure the same underlying story we’ve been telling for months: This is still a low-hire, low-fire market, and the calm on the surface reflects stillness underneath, rather than genuine momentum,” Ullrich noted.
Notably, the job diffusion index ticked upward, said Andrew Flowers, chief economist at Appcast, meaning more than a few industries are leading job growth. Flowers pointed to leisure and hospitality as well as construction making jobs gains in the past three months.
But this careful equilibrium can’t last, Ullrich said.
“Should demand soften, the lack of hiring leaves no cushion to reabsorb workers who lose their jobs, and what now reads as a quiet labor market could tip into a rising unemployment rate quickly,” Ullrich said. “The low-hire, low-fire dynamic has been remarkably durable, but durability isn’t permanence. The longer it persists, the more it’s worth watching for the first sign of which direction it finally breaks.”