Hiring exceeded expectations in May, with U.S. businesses adding 272,000 new jobs. The unemployment rate increased to 4% for the first time since January 2022, and average hourly earnings rose by 4.1% over the past 12 months, up from 3.9% in April. While these headline numbers suggest a strong labor market, there's more beneath the surface.
Confusion Below the Headlines: Diverging Data Sources
The monthly jobs report comprises three key metrics: job gains, unemployment rate, and wage growth, derived from two distinct surveys. Job gains and wage growth come from the "establishment survey" of around 120,000 businesses, while the unemployment rate stems from the "household survey" of 60,000 households. Though they align over the long term, short-term discrepancies can create conflicting narratives.
Monthly Jobs Change - May 2024
In May, the establishment survey reported 272,000 new jobs, while the household survey showed a loss of 408,000 jobs. These conflicting reports often lead to confusion.
Interpreting Conflicting Reports
The truth likely lies between the two surveys. The establishment survey may be overly optimistic, not fully capturing the experiences of workers and businesses. Conversely, the household survey's job loss figures might be exaggerated. Overall, the labor market remains strong but perhaps not as hot as initial estimates suggested.
Job Gains | Exceeding Expectations but with Nuances
May's 272,000 job gains surpassed expectations of 200,000, totaling over 1.2 million for the year. However, the household survey shows a year-to-date loss of 100,000 jobs, indicating a potentially cooler labor market than headline figures suggest.
Dominant Industries
Healthcare, government, and leisure and hospitality accounted for more than 50% of May's job gains. Many HR and business leaders report that their industries are experiencing slower job growth, adding fewer new roles and filling open positions at a cautious pace.
Unemployment Rate | Challenges Ahead for Job Seekers
The unemployment rate rose to 4%, the highest since January 2022. Although still low historically, this increase indicates a tougher job market for seekers.
Wages and Compensation | Key Focus for Businesses and Employees
Annual wage growth reached 4.1% in May, up from 3.9% in April. Except for last month, wage growth has remained above 4% since before the pandemic, highlighting ongoing compensation challenges.
Credit to Source and Recruit's partner, LaborIQ, for providing these valuable insights.
Confusion Below the Headlines: Diverging Data SourcesThe monthly jobs report comprises three key metrics: job gains, unemployment rate, and wage growth, derived from two distinct surveys. Job gains and wage growth come from the "establishment survey" of around 120,000 businesses, while the unemployment rate stems from the "household survey" of 60,000 households. Though they align over the long term, short-term discrepancies can create conflicting narratives.
Monthly Jobs Change - May 2024
In May, the establishment survey reported 272,000 new jobs, while the household survey showed a loss of 408,000 jobs. These conflicting reports often lead to confusion.
Interpreting Conflicting ReportsThe truth likely lies between the two surveys. The establishment survey may be overly optimistic, not fully capturing the experiences of workers and businesses. Conversely, the household survey's job loss figures might be exaggerated. Overall, the labor market remains strong but perhaps not as hot as initial estimates suggested.
Job Gains | Exceeding Expectations but with NuancesMay's 272,000 job gains surpassed expectations of 200,000, totaling over 1.2 million for the year. However, the household survey shows a year-to-date loss of 100,000 jobs, indicating a potentially cooler labor market than headline figures suggest.
Dominant IndustriesHealthcare, government, and leisure and hospitality accounted for more than 50% of May's job gains. Many HR and business leaders report that their industries are experiencing slower job growth, adding fewer new roles and filling open positions at a cautious pace.
Unemployment Rate | Challenges Ahead for Job SeekersThe unemployment rate rose to 4%, the highest since January 2022. Although still low historically, this increase indicates a tougher job market for seekers.
Wages and Compensation | Key Focus for Businesses and EmployeesAnnual wage growth reached 4.1% in May, up from 3.9% in April. Except for last month, wage growth has remained above 4% since before the pandemic, highlighting ongoing compensation challenges.
Credit to Source and Recruit's partner, LaborIQ, for providing these valuable insights.
