Job market keeps booming as employers add 339K roles in May

A key indicator of consumer demand is still running hot.

a sign that says we are hiring and apply today
Photo by Eric Prouzet on Unsplash

The U.S. economy continued to post job gains in May, even as the unemployment rate ticked up.

Data released for May 2023 by the U.S. Bureau of Labor Statistics showed the following:

Employers added 339,000 new jobs this month. The gains crossed the 300,000-mark for the first time since January. That’s in line with the average of 341,000 jobs added over the last 12 months.

Retail employment remained relatively unchanged for the month.

The unemployment rate ticked up by 0.3 percentage points to 3.7%. It remains within the historically low range of 3.4%-3.7% seen since March.

Average hourly earnings rose by 11 cents, or 0.3%, to $33.44. Over the last 12 months, earnings have increased by 4.3%.

What it means for brands and retailers: The job market is a key indicator of consumer demand. If people have job stability, it means they are likely to feel more confident about spending. In the prior three months, there were signs that job gains were beginning to decelerate after months of growth over the last two years. But this report shows that the robust labor market remains intact. Even though unemployment ticked up to its highest point since October 2022, it is still historically low. When it comes to jobs, this was a bounceback month to the roaring upward trendline.

What it means for the Fed: As it has raised interest rates repeatedly over the last year in an effort to contain inflation, the Fed has focused on rebalancing the booming labor market as a key priority. This report doesn’t deliver the data that would show progress on that front, creating an environment where it could choose to raise interest rates that have the side effect of curtailing demand. Still, the Fed has maintained that it may pause the rate hikes when it meets later this month, and that option will remain on the table. The central bank has slowed down interest rate hikes in recent months, even as the labor market continued to show strength. The decision will likely be down to the wire, as key inflation data in the Consumer Price Index will arrive just as Federal Open Markets Committee members are gathering for their meeting on June 13.

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