US hiring underwhelms in May as economic reopening hits turbulence

Washington (AFP) –


The United States added 559,000 jobs last month as hard-hit sectors rehired workers laid off during the worst of the pandemic, but analysts warned the virus was continuing to complicate the economy despite massive government stimulus.

The hiring reported in the Labor Department data undershot analysts' expectations for a lofty rebound enabled by accelerating Covid-19 vaccination campaigns, following the surprisingly weak employment gains in April.

But even so the jobs gains pushed the unemployment rate down to 5.8 percent from 6.1 percent in April.

Rubeela Farooqi of High Frequency Economics said the report indicated unemployed Americans were staying away from workplaces even though jobs are available, which she blamed on the persistent aftershocks from business restrictions meant to stop the virus from spreading.

"Job growth remains surprisingly sluggish in an economy that is no longer facing capacity constraints. Ongoing pandemic-related issues including childcare and health concerns are likely a constraint on job growth," she said in an analysis.

That echoes widespread reports from businesses about the difficulty filling open positions.

President Joe Biden had bet that the $1.9 trillion pandemic rescue measure he signed into law in March would help the economy recover strongly from the mass layoffs that put tens of millions of people out of work as the pandemic began in March 2020.

"Today's jobs report shows historic progress for American families and the American economy," Biden tweeted, noting unemployment has hit "its lowest level since the pandemic started."

- Bars and restaurants rehire -

The US economy still has a long road ahead before it can return to the record-low unemployment seen before the pandemic hit. The May data showed there are still 7.6 million jobs yet to be regained from February 2020.

However, the report contained important evidence that people who wanted jobs were getting them, with the number of long-term unemployed declining 431,000 to a still-high 3.8 million in May.

Sectors that were badly damaged by business restrictions to stop the virus made up the bulk of the employment gains last month, with the leisure and hospitality sector adding 292,000 jobs, two-thirds of which were in businesses like bars and restaurants.

Accommodations added 35,000 jobs, and amusement, gambling and recreation businesses added 58,000, but the leisure and hospitality sector overall remains short 2.5 million positions compared to February 2020, the report said.

- Coaxing workers back -

In a trend the Labor Department attributed to the struggles firms faces trying to attract unemployed workers back to the job, hourly wages increased strongly, rising 15 cents to $30.33 after a 21 cent gain in April.

"The data for the last two months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages," the report said, noting that the pandemic's employment disruptions "complicate the analysis" of wage trends.

The Labor Department also revised the gains for previous months slightly upwards, with March hiring reported at 785,000 and April revised to 278,000, a net increase of 27,000 for the two months.

However, there was little improvement in other key gauges of employment health, with the number of people not in the labor force who currently want a job unchanged from April at 6.6 million.

The labor force participation rate indicating the share of working-age adults employed or looking for a job remained basically unchanged from April at 61.1 percent -- 1.7 percent below its level before the pandemic.

Ian Shepherdson of Pantheon Macroeconomics said the labor force is more than five million individuals smaller than it would be if the trends before the pandemic had continued, bolstering the case that employers are not getting takers for open jobs.

"The lesson here seems to be either that employers have to pay more -- and perhaps much more -- in order to drag people into the labor force, or they have to wait until the forces which might be responsible for keeping people away from work fade," Shepherdson said.

Among those forces are the ongoing closures of schools and daycare facilities, and the expanded unemployment benefits paid by the federal government that half of US states are moving to end, but Shepherdson warned that even without those issues, "It's impossible to know if employers or employees will blink first."