The U.S. added 390,000 jobs in May as the unemployment rate remained at a pandemic low of 3.6%, The New York Times reports.
The Labor Department said that businesses added jobs for the 17th straight month even as the Federal Reserve takes steps to cool the economy in an effort to ease inflation.
Average earnings rose by about 0.3% in May, up 5.2% on the year, but all of those gains have been wiped out by rising prices.
And overall employment remains about 800,000 jobs short of pre-pandemic levels.
“We’re in the homestretch here — we could be about two months from being at the employment level that we had in prepandemic times in February 2020,” Andrew Flowers, a labor economist at Appcast, told the Times.
Hospitality jobs up:
Leisure and hospitality jobs rose ahead of the summer months as consumer spending fell from goods and rose for travel, dining, and entertainment.
Record consumer spending has caused companies to struggle to keep up with demands and businesses have raised pay to hire more workers.
But the Fed worries that rising pay rates will be passed on to consumers, worsening inflation.
“We’ve got to get back to price stability so that we can have a labor market where people’s wages aren’t being eaten up by inflation,” said Fed Chairman Jerome Powell. “And where we can have a long expansion, too.”
Big banks have warned of a possible recession as the Fed tightens interest rates but some economists believe policymakers can avoid shrinking the economy.
“Businesses with high profitability, easy access to capital, the capacity to automate, and pricing power are still eager to hire,” Bill Adams, chief economist at Comerica Bank, told the Times. “But businesses that are seeing their margins squeezed by rising costs, like hospitality, or that are seeing demand soften, like retail, are pulling job postings as their outlook softens. And competition for workers is squeezing lower-paying employers out of the job market.”