PeopleScout Jobs Report Analysis—May 2023

U.S. employers added 339,000 jobs in May, beating economist expectations. This shows that the labor market is remaining strong, despite rising interest rates. The unemployment rate rose to 3.7%. Year-over-year wage growth fell slightly to 4.3%.

The Numbers

339,000: Employers added 339,000 jobs to the U.S. economy in May.

3.7%: The unemployment rate rose to 3.7%

4.3%: Wages rose 4.3% over the past year.

The Good

The 339,000 jobs added in May point to a strong economy that is continuing to defy expectations, as the Wall Street Journal reports. May’s gains were widespread, with some of the strongest growth in education and health services and professional and business services. Even the construction sector, which is one of the most affected by rising interest rates, added 25,000 jobs.

Wage growth also softened slightly in May, which is good news for employers, and a sign that the Federal Reserve’s practice of lowering interest rates may be working. Slowing wage growth should decrease inflation.

The Bad

Underneath the strong headline of May’s report, there are some signs that U.S. job growth could start to slow. As the New York Times reports, the unemployment rate rose to the highest level since October. Additionally, the average number of hours worked decreased slightly, falling to prepandemic levels. Experts say if that number continues to fall, it could be a sign that the market is cooling.

The Unknown

The Federal Reserve meets next on June 13-14, and as MarketWatch reports, they are expected to avoid raising interest rates again. Experts say if the Fed raises rates too quickly and aggressively, they risk causing a recession, and Fed Chair Jerome Powell has said that skipping a rate increase in June could give them more time to study the impacts of past raises. However, with the continued strength in jobs numbers, the Fed may continue to raise rates later in the year.