Labor Market Added 390,000 Jobs In May—Beating Expectations Despite Looming Recession Concerns

Topline

The U.S. added back another 390,000 jobs in May, performing better than economists expected as the strong labor market recovery encourages Federal Reserve officials to more aggressively raise interest rates in their fight against inflation—even as experts worry over the potential implications for economic growth.

Economists have become increasingly concerned that prolonged inflation could be spurring a wave of … [+] layoffs.

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Key Facts

Job gains in May far surpassed the roughly 328,000 new jobs economists had forecast but fell short of the 436,000 new jobs added in April, according to data released Friday by the Labor Department.

Despite the better-than-expected gains, the unemployment rate remained flat at 3.6%—falling short of expectations calling for a return to the prepandemic rate of 3.5% in February 2020, when unemployment was hovering at its lowest level since 1969.

Key Background

After losing more than 20 million jobs at the height of pandemic uncertainty in the spring of 2020, the labor market has quickly and forcefully led the economic recovery. However, prolonged inflation and the threat of rising interest rates, which tend to hurt company earnings, have sparked concerns about the broader economy. Over the past month, corporate giants including Amazon and Walmart have both signaled a slowdown in their hiring needs, with Walmart executives pointing to “overstaffing” as a drag on disappointing profits last quarter. More recently, Tesla CEO Elon Musk reportedly ordered a hiring freeze on Thursday, telling employees he has a “super bad feeling” about the state of the economy.

This is a developing story. Please check back for updates.

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