Payrolls swelled while employers continued struggling to hire more workers. Here are the five things we learned from U.S. economic data released during the week ending June 3.
Another solid month of job creation. Nonfarm employers added a seasonally adjusted 390,000 workers to their payrolls in May, nearly matching gains of 398,000 and 436,000 in March and April, respectively. The Bureau of Labor Statistics measure remained 822,000 below its February 2020 pre-pandemic peak. Private sector employers added 333,000 workers, with 274,000 in the service sector and 59,000 in the goods-producing side of the economy. Industries adding the most workers were leisure/hospitality (+84,000), professional/business services (+75,000), government (+57,000), transportation/warehousing (+47,000), health care/social assistance (+42,100), and construction (+36,000). The average weekly earnings of $1,105.47 represented a 4.3 percent increase from a year earlier.
Based on a separate household survey, the unemployment rate remained at its pandemic low of 3.6 percent. 330,000 people entered the labor force in May, with the labor force participation rate edging up 1/10th of a percentage point to 62.3 percent. The participation rate for adults 25-54 added 2/10ths of a percentage point to 82.6 percent (a pandemic high). The number of part-time workers seeking a full-time job grew by 295,000 to 4.328 million, while the median length of unemployment rose by 2.1 weeks to 9.6 weeks. The broadest measure of labor underutilization added 1/10th of a percentage point to 7.1 percent. The U-6 index was at 10.1 percent one year ago.
In April, job openings and people quitting their jobs remained at near-record levels. The Bureau of Labor Statistics estimates there were a seasonally adjusted 11.400 million. While declining by 455,000 from March, open jobs remained 23.0 percent above year-ago levels. Industries with at least a million open jobs included retail, professional/business services, health care/social assistance, accommodation/food services, and the government. Hiring slowed by 59,000 to 6.586 million (+7.6 percent vs. April 2021). Also declining were the number of separations, falling by 215,000 during the month to 6.033 million (+4.9 percent vs. April 2021). Voluntary quits remained near record levels (off 25,000 to 4.424 million), while layoffs plummeted by 170,000 to 1.246 million.
Factory orders edged up in April. The Census Bureau reports that new orders for manufactured goods increased 0.3 percent during the month to a seasonally adjusted $533.2 billion. Orders over the first four months of 2022—$2.077 trillion—were 12.5 percent ahead of the comparable 2021 months. Durable goods orders jumped 0.5 percent in April, while nondurable orders inched up 0.2 percent. Civilian nonaircraft capital goods orders—a business investment proxy—increased 0.4 percent. Shipments grew 0.2 percent to $532.1 billion and have totaled thus far this year $2.054 trillion, up 12.6 percent over the first four months of 2021. Unfilled orders rose 0.5 percent to $1.107 trillion and inventories swelled 0.6 percent to $786.1 billion.
Purchasing managers report that manufacturing continued to expand in May. The PMI, the headline index from the Institute for Supply Management’s Manufacturing Report on Business, added 7/10ths of a point to 56.1. For 24 consecutive months, the PMI has been above a reading of 50.0, indicative of an expanding manufacturing sector. Measures tracking new orders, production, and inventories improved during the month, while the employment indicator fell into a contractionary reading. Fifteen of 18 tracked manufacturing industries expanded in May, led by apparel, printing, and machinery. The press release warns that “[o]verseas partners’ disruptions” will slow activity in the coming months.
…And say the same about the service sector. The ISM’s Services PMI lost 1.2 points in May. Even with the decline, the Services PMI reading of 55.9 was the 24th straight month above the critical 50.0 threshold. While the new orders and employment measures improved during the month, business activity/production and inventory indices declined. Fourteen of 18 service sector industries reported growth in May, led by mining, construction, and real estate. The press release noted that the pandemic and the Russian invasion of Ukraine continue to “disrupt the services sector,” as labor is “still a big issue and prices continue to increase.”
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending May 28, 2022, First-Time Claims, seasonally adjusted): 200,000, -11,000 vs. the previous week, -227,000 vs. the same week a year earlier). 4-week moving average: 206,500 (-54.8% vs. the same week a year earlier).
- Vehicle Sales (May 2022, Autos and Light Trucks, seasonally adjusted annualized rate): 12.68 million (-12.6% vs. April 2022; -24.9% vs. May 2021).
- Construction Spending (April 2022, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.745 trillion (+0.2% vs. March 2022; +12.3% vs. April 2021).
- Productivity (2022Q1-revised, Nonfarm Labor Productivity, seasonally adjusted annualized rate): -7.3% vs. 2021Q4; -0.6% vs. 2021Q1.
- S&P Case-Shiller Home Price Index (March 2022, National Index, seasonally adjusted): +2.1% vs. February 2022; +20.6% vs. March 2021.
- FHFA House Price Index (March 2022, Purchase-Only Index, seasonally adjusted): +1.5% vs. February 2022; +19.0% vs. March 2021.
Agricultural Prices (April 2022, Prices Received by Farmers, not seasonally adjusted): +5.1% vs. March 2022; +28.3% vs. April 2021.
- Beige Book
The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.