A nationwide worker shortage has pushed American wages higher, but data for May 2022 showed the pressure may be cooling – Copyright AFP Hector RETAMAL
US job gains continued in May but at a slower pace, and rapid wage gains cooled as well, a welcome sign for US policymakers trying to ease red-hot inflation.
American employers added 390,000 jobs last month, the Labor Department reported Friday, a sign of a slowdown in hiring but still a better-than-expected result amid a shortage of workers.
Employers have struggled to fill open positions, which has pushed wages higher, and average hourly earnings rose another ten cents compared to April, to $31.95.
The pay rate is 5.2 percent higher over the last 12 months ended in May, but that is slightly slower than the 12-month increase posted in April, the report said.
That could be good news for the Federal Reserve, which has launched an aggressive campaign to raise interest rates to combat the highest US inflation in more than 40 years.
“Average hourly earnings growth remains moderate relative to last year,” former White House economic advisor Jason Furman said on Twitter. “That’s the most important number in this release for inflation and it’s mostly reassuring.”
Ian Shepherdson of Pantheon Macroeconomics noted that the annualized rate of increase in the latest three months was just 4.3 percent — the smallest since April of last year.
“The downshift from the 6.1 percent peak in January is clear, and the rate will slow further,” he said, which “will bring a sigh of relief at the Fed.”
Fed Chair Jerome Powell has highlighted the shortage of workers as a worrisome factor in the world’s largest economy, with nearly two job openings for every unemployed person in the workforce as many people who left jobs during the pandemic have not returned.
– Coming off the sidelines –
The government data showed the labor force participation rate edged up very slightly to 62.3 percent, a sign more workers could be coming off the sidelines to rejoin the labor force, which would ease pressure on wages.
Kathy Bostjancic of Oxford Economics said she expects more people to return to the job market, which would affect wages in the second half of the year.
But she cautioned “it will take time for labor demand and supply to realign, keeping the pace of wage growth elevated and well above the pre-pandemic rate of around 3 percent.”
The jobless rate held steady at 3.6 percent for the third consecutive month, just a tenth of a point above the pre-pandemic level in February 2020, the Labor Department said.
The unemployment rate for Asians fell to 2.4 percent from 3.1 percent, but for Blacks and Hispanics, the rate increased to 6.2 percent and 4.3 percent, respectively.
Restaurants and hotels that were decimated due to Covid-19 showed a strong recovery in May, adding 84,000 positions, the data showed. The sector is still down 1.3 million jobs compared to the pre-pandemic level.
Jobs in business services increased by 75,000, and the government added 57,000, but retail employment fell by nearly 61,000, the report said.