The U.S. added 272,000 jobs to the market in May, higher than the average monthly gain of 232,000 over the prior 12 months, according to the latest data from the Bureau of Labor Statistics.
The unemployment rate saw little change at 4% as well as the number of unemployed people, at 6.6 million. Both measures are up from one year ago, when they were at 3.7% and 6.1 million, respectively.
“Today’s jobs report was strong; however, there has been other data coming out of the Bureau of Labor Statistics, including the job openings and turnover report, which has started to suggest that the labor market is weakening,” commented Bright MLS Chief Economist Dr. Lisa Sturtevant.
“A weakening labor market would be a double-edged sword for the housing market. On the one hand, slower hiring activity and rising unemployment could compel the Federal Reserve to cut interest rates when they meet later this summer. Mortgage rates, which have been hovering around 7% for much of 2024, could then start to come down,” continued Sturtevant. “On the other hand, a weaker labor market could dampen homebuyer demand. With affordability already a major challenge, slower wage growth or employment uncertainty will lead more prospective homebuyers to wait on the sidelines.”
Highlights of this month’s data include:
- Job gains were led by healthcare, government, leisure and hospitality and professional, scientific and technical services.
- Residential building construction added 3,500 jobs, while speciality residential contractor jobs remained flat.
- Government employment grew by 43,000 jobs, in line with the average monthly growth over the prior 12 months (+52,000).
- Employment in leisure and hospitality grew by 42,000, similar to the average monthly gain over the prior 12 months (+35,000). Employment in food services and drinking places grew by 25,000 jobs.
- Professional, scientific and technical services added 32,000 jobs, higher than the average monthly gain of 19,000 over the prior 12 months. Employment specifically increased in management, scientific and technical consulting services (+14,000) and in architectural, engineering and related services (+10,000).
- Retail trade employment gained 13,000 jobs, about in line with the average monthly gain over the prior 12 months (+8,000). Building material and garden equipment and supplies dealers added 12,000 jobs.
- Employment showed little or no change over the month in mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; transportation and warehousing; information; financial activities; and other services.
- Average hourly earnings for all employees on private nonfarm payrolls increased by 0.4% to $34.91. Over the past 12 months, average hourly earnings have increased by 4.1%. Average hourly earnings of private-sector production and nonsupervisory employees increased by 0.5% to $29.99.
NAR Chief Economist Lawrence Yun echoed Sturtevant’s sentiment of wariness regarding this month’s data.
“Job additions are continuing at a healthy clip. Americans, however, have not shown recognition, according to many polls, of an improving economy, which no doubt is due to the fact that the cumulative rise in consumer prices is still higher than the cumulative wage gain of the past four years,” he said. “Payroll data is considered much more reliable than household survey data. That is why Wall Street is expecting a further delay in the Fed’s interest rate cut. The mortgage rate looks to be stuck at near 7% average for at least another month.”
On the other hand, Realtor.com® Chief Economist Danielle Hale pointed more toward the positive. She added that “the data generally points to a gradually normalizing labor market, which is exactly what is needed at this stage of the economic cycle. Overall, the job market has slowed from previous highs, but appears to be normalizing in a healthy way and should help bolster confidence that monetary policy is having its intended effect. Labor market turnover data suggests that the churn of the pandemic-era ‘Great Resignation’ generally continues to settle, but the labor market retains a level of dynamism consistent with pre-pandemic highs.”
