U.S. employers added a robust 390,000 jobs in May as hiring slowed modestly after a record string of gains amid high inflation, persistent worker shortages and rising interest rates.
The unemployment rate was unchanged at 3.6%, just above a 50-year low, the Labor Department said Friday.
Economists surveyed by Bloomberg had estimated that 325,000 jobs were added last month.
The nation has recovered 21.2 million, or 96.2%, of the 22 million jobs lost early in the health crisis, leaving it 822,000 million jobs short of its pre-pandemic level. The gap could be closed by summer.
With the economy rapidly approaching that milestone, job growth is expected to moderate now that many employees laid off early in the health crisis have been rehired. Employers added at least 400,000 jobs a month for 10 months, the longest such streak on record. The string had continued for 12 months but revisions in Friday’s report nudged down March’s gains to a still-booming 398,000.
In May, leisure and hospitality, which includes restaurants and bars, the sector hit hardest by the pandemic, led the job gains with 84,000; professional and business services added 75,000; transportation and warehousing, 47,000; construction; 36,000; health care, 28,000; and manufacturing, 18,000.
Retailers, which have more than recovered all the jobs wiped out by the pandemic, lost 61,000.
Job growthng is expected to gradually slow this year. Inflation has been hovering near 40-year highs and gas prices have soared, leading many consumers to rein in spending and prompting the Federal Reserve to sharply raise interest rates. That makes borrowing more expensive and is expected to further dampen economic activity and hiring.
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While many Americans have streamed back into a favorable labor market, others are still caring for children, fearful of COVID, switching careers or living off federal stimulus checks or other aid. Some drifted back into the work force in May. The number of people working or looking for jobs rose by 330,000, nudging up the labor force participation rate from 62.2% to 62.3%, still well below the pre-COVID level of 63.4%.
Others, especially people who retired early during the health crisis, will probably never return, says Gus Faucher, chief economist at PNC Financial Services Group. That, he says, will contribute to a drop-off in job creation. He expects monthly job gains to downshift to just over 100,000 by the end of the year.
Other factors appeared to support further strong gains last month. While COVID-19 cases have risen, hospitalizations remain low, Goldman Sachs says, and restaurant visits continue to hover near their prepandemic level. Many people are eager to resume traveling, shopping and attending festivals and sporting events this summer, though they’re scaling back their plans because of inflation, a Bankrate survey shows.
