U.S. employers boosted hiring in May, but not enough for the labor market to keep pace with an overall economy that is heating up as the pandemic continues to ease. Payrolls grew by 559,000 last month, the Labor Department reported Friday, up from a revised 278,000 in April, which marked a sharp drop from March’s figure. The unemployment rate fell to 5.8% in May from 6.1% the prior month.
While the gains marked an uptick from April, they were lower than economists predicted and reflected businesses struggling to fill job openings as potential workers remained on the sidelines. The labor recovery has slowed from earlier in the year—in March, the economy added 785,000 jobs—a development economists say could delay a full labor recovery to well into next year.
That mixed picture cheered investors, who bet the numbers weren’t strong enough to change the Federal Reserve’s course on its easy-money policies. U.S. stocks rose, while the yield on the U.S. 10-year Treasury fell.
The jobs market stands in contrast with other areas of the economy that have rebounded more strongly. U.S. consumer spending, for example, has been near or exceeded pre-pandemic levels since the start of 2021, with outlays beginning to shift away from goods and into services as Americans resume everyday activities.
“It’s a middle-of-the-road report,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank, of the May numbers. “It is disappointing relative to where we were a few months ago, where we were anticipating you could see a million-plus type prints over these coming months. We have had to ratchet down our expectations about what job gains are likely to be going forward.”