By Thomas Cooley and Peter Rupert
The BLS announced that payroll employment increased 559,000 in May and the three month average at 541,000. The increase was widespread across the various sectors aside from construction, declining 20,000 and retail trade down 5,800. The service sector increased 489,000, leisure and hospitality led the way with a 292,000 increase.
Weekly hours of work stayed at an elevated 34.9 for the third consecutive month. During the pandemic, fewer workers were working longer hours and we expect average hours of work to come down once the affected sectors ramp up. Average hourly earnings rose $0.15 to $30.33.
Household Survey
The data from the household survey showed an increase of 444,000 employed individuals, however the labor force declined 53,000 and the labor force participation rate fell from 61.7% to 61.6%. The number of persons unemployed fell by 496,000. These changes led to a fall in the unemployment rate from 6.09% to 5.79%. Long-term unemployment fell by 431,000.
Unemployment Claims
Initial claims for unemployment fell by 20,000 to 585,000, continuing the downward trend. However, continued claims has been quite stubborn and increased 169,000 to 3,771,000.
It is clear that the various backstop unemployment policies have had an impact on the speed of adjust and its allocation across sectors. We will need to see some of the more generous policies end before the economy tries to reallocate jobs and effort on its own.
Headline unemployment rates are essentially meaningless at this point because may have stopped participating in the labor force. There are encouraging signs that the economy is ready to reallocate jobs, perhaps with healthier wages, when supply chain issues get resolved and government’s artificial supports are removed.
Everyone is expecting a robust recovery but the impact of conditions in the rest of the world remains unknown.
