The Slowdown in the US Job Market Didn’t Last Long

Although the April print suggested that the long-awaited labour market slowdown had finally begun, the May reading clearly called that into question. The net gain of 272,000 jobs was well above the consensus forecast of approximately 180,000 new hires. It’s closer to the monthly average of 273,000 jobs added for the period between December 2023 to March 2024. The May data also means that year-to-date job growth has been robust in 2024. Since January, 1,239,000 jobs have been created, which isn’t too far from the 1,496,000 jobs posted for the first five months of 2023.

Additionally, of the 250 industries covered by the survey, the proportion where employment increased also rose from 56.6% in April to 63.4% in May. This is the highest percentage since January 2023 (when 482,000 jobs were created). That means the improvement in the job market was also broad-based. That said, some industries nevertheless showed job losses, especially department stores (-4,800), furniture and home furnishing retailers (-3,900), truck transportation (-5,400) and temporary help services (-14,100). In fact, the temporary help services sector has now posted monthly declines for 25 of the past 26 months. In total, the sector has lost 452,000 jobs since spring 2022.

Obviously, strong hiring is fuelling wage growth. Average hourly earnings jumped 0.4% in May, the biggest monthly increase since January. While other labour market data on job openings in April gave rise to hopes of a sharper slowdown in wages, May’s print suggests that wage growth could keep fuelling inflation, especially in services.

While the establishment survey shows the job market roaring back to life, the household survey paints a vastly different picture. It revealed the loss of 408,000 jobs, which would be the worst monthly decline since December 2023. This means the sharp divergence between the two surveys has widened even more. That said, the household survey is less reliable and more volatile, and its margin of error for monthly changes (±600,000 jobs) is much higher than the establishment survey’s (±130,000 jobs).

The US job market remains highly resilient, and the brief slowdown seen in April was quickly erased by the May print. Under these circumstances—especially fast-rising wages—the Federal Reserve will most likely stay on the sidelines at next week’s meeting. Although other central banks have started easing their monetary policies, we don’t expect the Fed to follow suit before November.