May sees yet another strong month of US job growth. Sure beats recession.

Yet another strong US jobs report in May whether you want to see it or not.

Total nonfarm payroll employment rose by 390,000 in May, and the unemployment rate remained at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, in professional and business services, and in transportation and warehousing. Employment in retail trade declined….

In May, the unemployment rate was 3.6 percent for the third month in a row, and the number of unemployed persons was essentially unchanged at 6.0 million. These measures are little different from their values in February 2020 (3.5 percent and 5.7 million, respectively), prior to the coronavirus (COVID-19) pandemic.

On the goods-producing side, construction an especially strong May, and manufacturing had a solid gain last month to go along with strong upward revisions for gains in March and April. Both sectors are near or exceeding their pre-COVID levels of employment.

Employment in construction increased by 36,000 in May, following no change in April. In May, job gains occurred in specialty trade contractors (+17,000) and heavy and civil engineering construction (+11,000). Construction employment is 40,000 higher than in February 2020….

Manufacturing employment continued to trend up in May (+18,000). Job gains occurred in fabricated metal products (+7,000), wood products (+4,000), and electronic instruments (+3,000). Employment in manufacturing overall is slightly below (-17,000 or -0.1 percent) its February 2020 level.

Given that the boost in infrastructure spending is just starting, and that new orders and shipments for manufacturers continue to rise, there’s no reason to think hiring in these industries will slow down any time soon (well, unless there are no potential workers left that want to take these jobs).

Bars and restaurants (+46,100) and accommodations (+21,400) continued to recover from the pandemic (even as reported cases rose in May). May’s increase is even more impressive when you consider that those sectors count on Summer hiring to start in May, which means the increases went above and beyond that expected growth.

Job change, May 2022
Bars/restaurants
Seasonally-adjusted +46,100
Raw increase +251,800

Accomodation services
Seasonally-adjusted +21,400
Raw increase +66,100

That being said, the job levels in these sectors are still well below where they were in the pre-COVID era.

Despite the lower employment numbers, accomodation and food services are one of the few sectors where hourly wages are increasing faster than the 8% inflation rate (up 11.8% for non-supervisors and 10.3% for all jobs in these industries). And while overall hourly wages weren’t up all that much in May, I note that everyday workers are actually outpacing their bosses for raises these days.

Average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3 percent, to $31.95 in May. Over the past 12 months, average hourly earnings have increased by 5.2 percent. In May, average hourly earnings of private-sector production and nonsupervisory employees rose by 15 cents, or 0.6 percent, to $27.33.

And those non-supervisory workers have seen robust wage gains of 6.5% over the last 12 months, which might help explain how consumer spending has continued to rise beyond the rate of inflaton in the first half of 2022.

I get that inflation is a stressor for a lot of Americans, especially in a country where so many live close to the edge, and the visible rises in food and gas prices are especially infuriating. But those price increases are not slowing down growth in the US jobs market, and last week’s “record low layoff, high openings” JOLTS report and jobless claims staying at or below 200,000 a week as May ended shows that this economy keeps growing.

And this is why my bigger concern isn’t whether prices keep going up (within reason, of course). It’s that the Federal Reserve will raise interest rates too high and too fast, which will cause panics in the asset markets and lead to drastic cutbacks in other places. By comparison, I think if the economy can be managed where the torrid pace simply slows down vs slamming shut, we might well see the “soft landing” that would continue full employment while tampering down inflation.

I can't remember seeing a greater disjunction between media commentary on the economy (every second story seems to be about risk! of! recession!) and economic reality.

The graph gives you a sense of scale, showing that persistent job growth around +390k is unusually *strong*. pic.twitter.com/0YJwNDOC7C

— Justin Wolfers (@JustinWolfers) June 3, 2022

Even a small drop in spending in certain industries wouldn’t be a bad thing, as it would give many industries a better chance to “catch up” to a situation where demand is outpacing the supply of labor and materials/supplies. I keep waiting for that slowdown in both spending and (indirectly) the jobs market, but it’s not happening yet, and we need to be telling this truth, and acting accordingly.