The Current, delivered daily.
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.
Trending in Economy
Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”