SHOCKS: Hirings and quits remained buoyant in May, reflecting continued strength in labor market
About 4.3 million Americans left or changed jobs in May, reflecting a labor market where workers continue to have the upper hand. Overall hiring, meanwhile, slowed slightly, with businesses adding 6.5 million workers in May, against 6.6 million a month earlier. Layoffs, meanwhile, remained near record highs.
“That’s not what a recession looks like,” said Nick Bunker, an economist at jobs site Indeed. “The demand for workers may be stagnating, but it remains at very high levels. The labor market is not signaling a recession.
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Hiring remains healthy despite growing signs of economic sluggishness. Inflation – which has driven up the price of gasoline, groceries and goods – is near 40-year highs. Consumer confidence is at rock bottom. And more and more economists and forecasters are predicting a recession within the next year.
These fears have rattled investors and wreaked havoc on financial markets. Oil prices plunged as much as 10% on Tuesday, with U.S. crude prices falling below $100 a barrel for the first time in May. The stock market, meanwhile, continued to slide after closing its worst first half since 1970 before the July 4 holiday. Markets were down late Wednesday morning after the release of the jobs report.
But the strength of the labor market and the low unemployment rate – at a pandemic low of 3.6% – have remained a source of optimism for economists and policymakers. Federal Reserve officials have consistently cited harsh labor conditions as one of the main reasons they feel comfortable raising interest rates to cool the economy. The hope is that they can rein in inflation without skyrocketing unemployment.
US employers created a blockbuster 390,000 jobs in May, after nearly a year of at least 400,000 new jobs per month.
Unemployment rate remains stable at a pandemic low of 3.6%
The next big test will come Friday morning, when the Labor Department releases June employment numbers. Although labor market growth is generally expected to slow, a sharp decline is unlikely.
“We hear a lot about an impending economic downturn, but someone forgot to tell the labor market,” said Bledi Taska, chief economist at Lightcast, a labor market data and analytics firm. work, in an e-mail. “Even if the economy stabilizes from the pandemic shockwaves and slips into a period of recession, the United States will likely still have around 7 million job openings.”
The rapid rebound comes after more than 20 million people lost their jobs in the first months of the pandemic. Since then, American employers have tried to rehire many of these workers by offering higher wages and more flexible hours. Some of the biggest hiring gains in recent months have been in professional and business services; leisure and hospitality; and trade, transport and public services.
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That trend continued in May, according to Labor Department data, with each of those industries adding at least 1 million new workers. However, some sectors, such as wholesale trade and the federal government, reported an increase in layoffs.
“Of course, not all industries do the same thing,” said Julia Pollak, labor economist at ZipRecruiter. “But we are not seeing a general labor market cooling in terms of the demand for workers.”
In Galveston, Texas, James Gonzalez says he’s pretty much given up trying to find qualified truckers. For several months now, he’s been the sole driver at his company, Gonzalez Trucking, where employees typically earn around $25 an hour.
“It’s so hard to find people, especially someone who knows what they’re doing,” he said. “I’ve been doing this for 20 years and I can’t think of a time when it’s been this hard.”
Hamza Shaban contributed to this report.