U.S. adds 339,000 payroll jobs in May as unemployment also rises sharply.
The labor market dominated economic indicators this week with a sharp increase in payroll employment during May and a modestly higher number of job openings in April.
Even with those robust results there were signs of loosening, however. For example, May saw the largest monthly increase in the number of unemployed individuals since the April 2020 contraction.
Employment situation
The U.S. added 339,000 payroll jobs, seasonally adjusted, in May, and the Bureau of Labor Statistics revised earlier March and April estimates higher by a net of 93,000. Payroll employment in May was up 2.7% y/y and 2.5% higher than February 2020.
Although payroll employment as measured by the BLS establishment survey is still quite robust, the BLS household survey revealed a few signs of weakness. Employment as measured by the household survey fell by 310,000 – the first decrease since November and the largest since April 2022.
Meanwhile, 440,000 more individuals were unemployed in May than in April, according to the household survey. That increase is the largest since the 15.9 million surge due to lockdowns in April 2020. The closest increase in unemployment during that period was 303,000 in August 2022.
The unemployment rate rose to 3.7% from 3.4% in April. The rate has been in that range since March of last year. The labor participation rate held at 62.6% for the third straight month.
Payroll employment was broadly stronger throughout the economy with the largest gains occurring in private education and health services at 97,000 jobs added, seasonally adjusted. Leisure and hospitality, which frequently has led job growth during the recovery, was only the fourth largest gainer at 48,000 jobs added and is still 349,000 jobs behind February 2020, seasonally adjusted.
Only two major sectors – information and manufacturing – saw job losses versus April. The decline in manufacturing was only 2,000 jobs, although a 10,500-job increase in transportation equipment manufacturing offset decreases in most other manufacturing sectors.
Employment in trade, transportation, and utilities was up by 37,000. Retail trade jobs rose by 11,600, mostly due to general merchandise retailers.
Transportation and warehousing jobs rose more than 24,000 due mostly to transit and ground passenger transportation (up 11,800) and couriers and messengers (up 8,200). The latter industry – commonly known as parcel and local delivery – also saw a 14,100-job upward revision of April estimates.
Warehousing and storage jobs continued to fade a bit after the extraordinary pandemic-era gains that peaked in June 2022. Job levels have been down y/y for the past three months. Before March, warehousing and storage had not seen a negative y/y comparison since July 2010. (For a discussion of trucking jobs, see the Trucking section below.)
Job openings
After three straight months of decreases, unfilled job positions at the end of April were 3.7% higher than at the end of March. Job openings totaled 10.1 million, which is 16% below the record of just over 12 million in March 2022 but still more than 44% higher than at the end of February 2020.
Job quits, which generally have been on a downward trend for the past year, declined 1.3% m/m in April. Quits are down nearly 16% from the peak of the so-called “Great Resignation” in November 2021 and are up only 8.7% versus February 2020.
ISM manufacturing index
The closely watched Institute for Supply Management’s manufacturing index eased two-tenths of a point to 46.9% in May. Readings under 50% indicate contraction, which has been the situation for the ISM index for the past seven months.
While the deterioration in the overall index was small, a concern for future freight volume was a 3.1-point drop in the new orders component of the index to 42.6%. The data was not all bad, however, as the production component increased 2.2 points to 51.1% after five straight months in contraction territory.
Mortgage rates
Mortgage rates moved sharply higher in the latest week. According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage rose 0.22-point in to 6.79%, which is the highest rate since October. The increase also is the largest since October and followed a notable gain during the prior week.
Freddie Mac attributed recent gains to expectations of another Federal Rate increase. It expects buying demand to weaken as rates approach 7%.
Diesel and petroleum prices
The national average price of diesel declined 2.8 cents to $3.855 a gallon during the week ended May 29. Diesel prices have now fallen for six straight weeks and in 16 of the past 17 weeks. Prices on average fell in all regions. The national average price is down nearly 77 cents over the past 17 weeks and almost $1.96 since hitting a record in June 2022.
Diesel prices could continue to fall. Crude oil is still trading around $70 a barrel. Distillate inventories had been falling, but in the latest week they moved higher. Moreover, distillate production has risen for five straight weeks after declines in April.
All comments are reviewed for approval and will not show up automatically.
You ask. FTR Experts answer.
From freight demand to system capacity to equipment production, our clients benefit from the industries most reliable forecasts, quantitative market intelligence, key trends, and comprehensive analysis on North American freight transportation. Transportation professionals apply this information to their internal planning, forecasting, and market analysis.
Our clients come from the shipping, trucking, rail, intermodal, equipment, and financial communities.
