May jobs rebound, skilled workers still needed: CEI analysis

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The job situation for May 2024 indicates employment numbers are rebounding with 272,000 jobs added, though employers are still struggling to find the right people for open positions.

CEI Senior Economist Ryan Young:

“May’s good employment news gives the Federal Reserve some maneuvering room to stay focused on inflation during its next interest rate meeting from June 11-12. A net increase of 272,000 jobs annualizes to more than 3 million new jobs for the year. That isn’t gangbusters, but it is solid.

“While the unemployment rate edged up to 4.0 percent for the first time in more than two years, that itself is potentially good news. Since the unemployment rate only counts people who are actively seeking work, this is a sign that more people want to join the workforce.

“While this seems at odds with an increase of 100,000 discouraged workers, these aren’t necessarily the same groups of people. More broadly, an economy under 5 percent unemployment is usually in good shape.

“There are still worries about two quarters of slowing economic growth and about getting the last mile of inflation conquered. Both of those fronts are uncertain. But a solid labor market makes the Fed’s job easier, allowing it to focus on inflation. It can and should lay off any stimulus.”

CEI Research Fellow Sean Higgins:

“The Labor Department’s report that the economy added 272,000 jobs in May, well past economists’ expectations, refutes fears that employers had pulled back on hiring. The official unemployment rate ticking up to 4 percent is ironically good news because it indicates that more workers are actively searching for jobs.

“Employers are nevertheless still struggling to find match job openings with appropriately skilled people. Wages rose by 14 cents in May, but increased pay cannot overcome a skills gap, at least not in the short term. The number of discouraged workers — those who believe that no jobs are available for them – rose by 100,000 in the last month. The labor force participation rate declined marginally to 62.5 percent.

“Employers want more workers and will pay a premium for them yet still struggle to find the people they need.  A chronic shortage of workers may be the new economic reality”