BUSINESS + ECONOMY

Jobs accelerated in May; why that’s a bad thing

Jun 7, 2024, 10:00 AM

An employer and employee shaking hands. Jobs accelerated in May, but is that a good or bad thing?...

Jobs accelerated in May, but is that a good or bad thing? (Canva)

(Canva)

SALT LAKE CITY — The US Bureau of Labor Statistics reported that job employment accelerated in May to 272,000. At the same time, the unemployment rate jumped to 4%; a year ago, it was at 3.7%.

Senior Economist for Zion Bank, Robert Spendlove said while most would think those rates are a good thing, it actually isn’t.

“This is where it’s tough. You would think that’s good. But what the big fear has been is that the labor market would continue to overheat,” Spendlove told KSL News Radio.

“We saw a great number last month where it kind of normalized down to 175,000,” he said. “But with the number accelerating to 272,000, it makes it tougher for the Federal Reserve to be able to drop rates later this year.”

Spendlove said when there is a fluctuation like this in the labor participation, unemployment rate and overall number, it causes the wage growth to accelerate and could drive more inflation moving forward.

According to Spendlove, the escalation in job employment went above the range expected for May.

The US BLS reported that the rise is job statistics is “higher than the average monthly gain of 232,000 over the prior 12 months.” 

Is seasonality playing a part?

With school getting out and teenagers getting summer jobs, some might think the time of year plays a part of the job rate growth. Spendlove said that is not the case for May’s report.

“There is some seasonality to this. But remember that this is for the previous month,” Spendlove said. “This is for May so it shouldn’t have that impact. They try to adjust for some of that seasonality, but it also shows you have to be really careful about over-interpreting any single jobs report because you can see some noise in that.”

According to the US BLS, the leading jobs in the acceleration is health care, followed by government, leisure and hospitality, and professional, scientific and technical services. 

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Jobs accelerated in May; why that’s a bad thing