Hiring jumps in May add 339,000 jobs

WASHINGTON — The nation’s employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations and evidence of enduring strength in an economy that the Federal Reserve is desperately trying to cool.

Friday’s report from the government reflected the job market’s resilience after more than a year of aggressive interest rate increases by the Fed. Many industries, from construction to restaurants to health care, are still adding jobs to keep up with consumer demand and restore their workforces to pre-pandemic levels.

Overall, the report painted a mostly encouraging picture of the job market. Yet there were some mixed messages in the May figures. Notably, the unemployment rate rose to 3.7%, from a five-decade low of 3.4% in April. It’s the highest unemployment rate since October. (The government compiles the unemployment data using a different survey than the one used to calculate job gains, and the two surveys sometimes conflict.)

Here are some questions and answers:

Q: Is the labor market as strong as the gain of 339,000 jobs suggests?

A: Probably not. In May, employers added the most jobs since January. So the overall picture is an encouraging one. Yet there are signs that hiring is cooling from the super-heated levels of the past two years.

For one thing, the length of the average work week declined, to 34.3 hours from 34.4 in April. That is a seemingly small drop, but economists said it’s equivalent to cutting several hundred thousand jobs. It means that, on average, weekly paychecks will be slightly smaller.

Hourly wage growth also dipped in May, evidence that many businesses feel less pressure to dangle higher pay to find and keep workers. Average hourly pay increased 4.3% from a year earlier.

Q: Is the economy headed for a recession?

A: Not likely anytime soon. The strong, steady job growth of the past several months shows that the economy remains in solid shape despite the Fed’s interest rate hikes, which have made borrowing much costlier for businesses and consumers. A recession, if one occurs, is likely further away than many economists had previously thought.

“As long as the economy continues to produce above 200,000 jobs per month, this economy simply is not going to slip into recession,” said Joe Brusuelas, chief economist at consulting firm RSM.

More hiring translates into more Americans earning paychecks, a trend that suggests that consumer spending — the principal driver of U.S. economic growth — will keep growing.

Q: Does that mean the economy is in the clear?

A: Not necessarily. Some cracks in the economy’s foundations have emerged.

And consumers are showing signs of straining to keep up with higher prices. The proportion of Americans who are struggling to stay current on their credit card and auto loan debt rose in the first three months of this year, according to the Federal Reserve Bank of New York.

The Fed has projected that its rate hikes will weaken the economy and raise unemployment, as well as lower inflation.