Another Miss: U.S. Economy Adds 559,000 Jobs in May, Unemployment Rate Drops to 5.8%

Another Miss: U.S. Economy Adds 559,000 Jobs in May, Unemployment Rate Drops to 5.8%

The U.S. economy added 559,000  jobs in May and the unemployment rate dropped to 5.8 percent, the Labor Department said in its monthly labor assessment Friday.

The median forecast of analysts surveyed by Econoday was for 650,000 jobs and an unemployment rate of 5.9 percent. The Dow Jones consensus estimate was for 617,000.

The disappointing number follows April’s big miss. This adds evidence to the claim that hiring is being held back by enhanced unemployment benefits and schools that have not reopened full time, requiring some parents to stay home to take care of children. Many businesses say that they cannot hire enough workers to fill positions because of the government’s enhanced unemployment benefits program.

The economy has outperformed expectations on many metrics this year as vaccinations have boosted business and consumer confidence and restrictions on businesses have been lifted. The April and May employment numbers represent a rare misses.

April’s figure was revised up to 278,000 from 266,000, a smaller revision than many expected. March’s jobs number, initially reported at 916,000, has been revised down to 785,000.

In May, nonfarm payroll employment is down by 7.6 million, or 5.0 percent, from its pre-pandemic level in February 2020.

Average hourly earnings for all employees jumped by 15  cents to $30.33 in May, following an increase of 21 cents in April. Average hourly earnings of private-sector production and nonsupervisory employees rose by 14 cents to $25.60 in May, following an increase of 19 cents in April. The month after month increases suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages, the Labor Department said.

Leisure and hospitality added 292,000 jobs, including 186,000 jobs in restaurants and bars. Casinos, amusement parks, and recreation centers added 58,000. Hotels and motels added 35,000. Despite the gains, employment in the leisure and hospitality category is down by 2.5 million, or 15 percent, from its prepandemic level.

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