The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for May 2023 on Friday, June 2nd. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market.
Employment in the U.S. rose by 339,000 jobs. The job results were significantly above the Geographic Solutions, Inc. forecast of 189,000 which was virtually tied with the WSJ estimate of 190,000. May’s unexpectedly strong results are compounded by the upward revisions in March and April that totaled 93,000 more jobs than reported last month. Geographic Solutions, Inc. derives its employment forecast from internal data on the number of job counts and job severances filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).
The unemployment rate surged to 3.7%. The Geographic Solutions, Inc. and WSJ forecasts had anticipated an uptick to 3.5%. The unemployment rate forecast uses internal data on the number of job openings and gross job posts on Geographic Solutions state client sites.
Job creation was strongest in Education & Health Services (97,000). Professional & Business Services, Government and Leisure & Hospitality sectors were the other major contributors to employment. Manufacturing was flat, and Information was the only major sector to experience notable job loss.
Leisure & Hospitality and Government are the only major sectors to remain below their pre-pandemic employment levels.
Labor force participation maintained its 62.6% rate from the previous two months. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment increased to 6.7%.
The May employment report revealed that payroll jobs continue to grow at a brisk pace, despite the fears of a slowdown as the Federal Reserve tackles inflation. However, the rising unemployment rate from the Household Survey makes labor market conditions less clear. Looking forward, June’s employment report will probably not tell us much because of the standoff over raising the federal debt ceiling between Congress and the Whitehouse. Although a default appears to have been averted, many companies may have made contingency plans after May 12th (when the June survey period starts) which involve a slowdown in hiring. July should reveal more about the resilience of the labor market heading into the 2nd half of 2023.