MOLINE, Ill. — On Friday, the U.S. Department of Labor released its monthly Employment Report for May. Last month, the economy added 270,000 new jobs. This was above Wall Street’s forecast of 182,000 and above the 165,000 reported in April. However, the national unemployment rate did jump from 3.9% to 4%.
News 8's Charles Hart spoke with Mark Grywacheski from the Quad Cities Investment Group about the recent report.
Charles: This latest Employment Report was a bit mixed. We had strong job growth but the unemployment rate increased to 4%. What does this latest report tell us about the state of the labor market?
Mark: You really have to examine all the labor market data in its entirety. The latest data reinforces the narrative that the labor market is still quite strong but it has been gradually weakening.
On the plus side, job growth remains quite robust. Last month, the economy added 272K new jobs, beating Wall Street’s forecast of 182K. So far this year, the economy has averaged a very solid 248K new jobs each month. Annual wage growth is at 4.1%.
However, the unemployment rate continues to edge higher. Last month, the unemployment rate jumped from 3.9% to 4%, the highest rate in 29 months. And finally, we’ve been seeing a rapid decline in the number of job openings across the country.
Charles: Last week the Department of Labor also reported the number of job openings in the US declined by 296,000. Why are we seeing such a large pullback in the number of job openings?
Mark: This is just another indicator that the labor market- though still fairly strong- is showing signs of weakening. Currently, there’s about 8.06M unfilled job openings spread out across the country. That’s the fewest number of job openings in over three years.
There are 1.84M fewer job openings now than there were just one year ago in April 2023 and 3.72M fewer than two years ago in April 2022.
We talk about the impact that high inflation and high interest rates have had on the American consumer. Businesses are no different- they also feel the strain of high prices and high costs. And more and more, we’re starting to see businesses cut back on the number of job openings they post.
Charles: What’s the outlook for the labor market for the rest of the year?
Mark: Despite the gradual weakening, there isn’t a doom-and-gloom outlook for the labor market. The number of new jobs being added each month is expected to gradually decline. The general consensus on Wall Street is that the unemployment rate will likely inch higher but still remain below 4.5% by year-end. An unemployment rate of 4.5% is not a sign of distress for the labor market. Now, if the unemployment rate were to quickly surge to 5.5%-6%, that’s a different conversation.
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Quad Cities Investment Group is a Registered Investment Adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place.
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