(Washington) The unemployment rate climbed in May in the United States, to 4%, the highest since January 2022, but it is above all the job creations, much more numerous than expected, which are capturing attention, showing a strong job market, five months before the presidential election.
“America’s great comeback continues, but we still have progress to make,” President Joe Biden said in a White House statement.
The unemployment rate climbed to 4%, up from 3.9% in April, according to figures released Friday by the Labor Department.
But creations jumped, with 272,000 new jobs in May, compared to 165,000 in April – a figure revised downwards – in health care, public services, leisure and hospitality, and professional services.
These figures come from two different surveys, one carried out among businesses, the other among households, which may explain these opposing developments.
The business survey, which focuses on jobs created, is “rightly attracting more attention,” said Kathy Bostjancic, chief economist for insurance company Nationwide.
Because that carried out among households, which makes it possible to establish the unemployment rate, is “smaller and more volatile”, she added.
The labor force participation rate fell to 62.5% from 62.7% the previous month. And salaries have increased more than expected.
“The household survey, from which the unemployment rate is calculated, painted a bleaker picture, as employment fell significantly and the participation rate declined,” said Ryan Sweet, economist for Oxford Economics.
“Although apparently solid, the labor market sent mixed signals in May,” also underlines Lydia Boussour, economist for EY Parthenon.
All eyes are now on the American central bank (Fed), which meets on Tuesday and Wednesday. She is observing the employment situation very closely.
Because without a return to normal, it is difficult to imagine a lasting drop in inflation, a sine qua non condition for convincing the Fed to lower its rates, and therefore allow households and businesses to have access to less expensive credit. .
The May employment figures “rather support a patient stance” from the Fed, judge Rubeela Farooqi, chief economist for HFE.
The latter highlights in particular the fact that “the salary data, which showed an acceleration in monthly and annual variations, was disappointing, creating an unpleasant surprise”.
“This report (on employment) means that the Fed will keep interest rates at their current high level for a few more months,” also anticipates Ian Shepherdson, chief economist for Pantheon Macroeconomics.
Nevertheless, the Fed “is attentive to the risks weighing on the economy if the labor market stumbles” and “moves on a tightrope”, underlines Ryan Sweet: if it waits for “concrete evidence of the slowdown in the labor market, it will be too late by then,” he warns.
To curb inflation, the Fed has kept rates in the range of 5.25 to 5.50% since July, their highest level in 20 years. No decline is expected by market participants before the meetings in September or November.
The country has experienced a significant labor shortage since 2021, and, to attract candidates and retain their employees, companies had offered higher salaries and more advantageous conditions, ultimately driving up costs.
This led to the “Great Resignation” movement, with employees massively changing jobs to take advantage of these favorable conditions.
But by April, the number of job vacancies had fallen to its lowest level since February 2021 at 8.06 million from 8.35 million the month before, according to Labor Department figures.
Job creation in May in the private sector alone suffered from a sharp deterioration in the manufacturing sector, showed Wednesday according to the monthly ADP/Stanford Lab survey.