• US non-farm payrolls grew 559,000 in May

• Unemployment rate ticked lower to 5.8%

• Wage growth increased 0.5% mom, 2.0% yoy

• Labor force participation edged down to 61.6%

• NFP shows economy nowhere near substantial progress

Hiring picked up in May after a disappointing April, as nonfarm payrolls rose 559,000 jobs. Still, that was below market expectations for around 670,000. Meanwhile, the change in total nonfarm payroll employment for March was revised up by 15,000, from 770,000 to 785,000, and the change for April was revised up by 12,000, from 266,000 to 278,000. With these revisions, employment in March and April combined is 27,000 higher than previously reported.

Once again, leisure and hospitality led the way on job gains, adding 292,000 positions. Two thirds of those jobs were in restaurants and bars, which added back 187,000 workers. Leisure and hospitality employment is still down 15%, or 2.5 million jobs, versus pre-pandemic levels. Hiring was also up in local government education (+53,000), state government education (+50,000) and private education (+41,000), reflecting the resumption of in-person learning. Health care and social assistance also had decent job growth (+46,000) in May, with a big jump up in employment in child care services (+18,000). On the goods side of the economy, manufacturing employment rose 23,000 in May. However, construction shed 20,000 positions, driven by non-residential specialty trade contractors (-17,000). Retail trade also shed workers for the second consecutive month (-6,000), as food and beverage stores reduced staffing for the third consecutive month.

The unemployment rate fell to 5.8%, from 6.1% in April. The drop in the unemployment rate was driven by a smaller 444,000 gain in household employment, but the labor force fell slightly (-53,000). Therefore, labor force participation edged down 0.1 percentage points to 61.6% in May, and has made little improvement since June 2020.

Source: BIMB Securities Research - 8 Jun 2021