U.S. job growth came in stronger than expected in May, boosted by a flurry of hiring across different sectors of the economy.
Employers added 339,000 jobs in May, the Labor Department said in its monthly payroll report released Friday, easily beating the 190,000 jobs forecast by Refinitiv economists. That also marks an increase from April, when payrolls increased by an upwardly revised 294,000.
At the same time, a separate report, based on a survey of households, offered a slightly different picture of the labor market. The report indicated the unemployment rate climbed to 3.7% from 3.4%, even though the labor force participation rate remained unchanged last month. It was the highest jobless rate since October 2022.
Job gains were broad-based last month, with professional and business services leading the way. The sector added 64,000 new jobs last month, following a similar gain in April.
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Administration and support services accounted for a large percentage of those gains, adding 19,900 workers in May. There were also notable gains in accounting, tax preparation and other payroll services (10,800), management, scientific, and technical consulting services (8,200) and architectural, engineering and related services (7,000).
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Hiring in the government was the second-biggest component behind the surprisingly strong jobs report. The sector hired 56,000 employees in May, with the biggest gains in local government, including education (30,000) and state government (19,000).
Employment in the sector remains below its pre-pandemic level by about 209,000 workers, or 9%.
“Job growth in May was decisively titled towards higher paying jobs,” said Joe Brusuelas, RSM chief economist.
Another big source of job creation in May was health care, which saw payrolls increase by 52,400. Hospitals accounted for the bulk of those gains, adding 19,600 workers. There were also substantial increases in nursing and residential care facilities (8,900), the office of physicians (8,200) and home health care services (5,800).
Leisure and hospitality, the hardest hit by the COVID-19 pandemic, also recorded another blowout month for job gains. The industry saw the bulk of the gains take place at bars and restaurants, which onboarded 33,100 employees in May. Performing arts, spectator sports, and related industries saw an increase of 10,600.
Hiring in other industries, including construction (25,000), transportation and warehousing (24,200), social assistance (22,200) and retail trade (11,600) also increased last month.
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“Job growth remains robust in what is undeniably a historically tight labor market,” Brusuelas said. “Despite notable headlines around layoffs the duration of unemployment stands near eight weeks which implies jobs remain plentiful and those that are displaced find employment, often at better wages, quite quickly.”
Just two sectors of the economy shed jobs last month: Manufacturing, with a decline of 2,000, and information, which lost 9,000 positions.