Job growth accelerated in May. Total payroll employment rose by 339,000 and the unemployment rate rose to 3.7%. While labor demand remained strong, wage pressures eased from a year ago. In May, wage growth slowed to a 4.3% year-over-year gain, from 4.4% last month, and down 1.6 percentage points from a 5.9% gain in March 2022.
Total nonfarm payroll employment increased by 339,000 in May, following a gain of 294,000 in April, as reported in the Employment Situation Summary. It marks the largest monthly gain in the past four months. The estimates for the previous two months were revised up. The estimate for March was revised up by 52,000 from +165,000 to +217,000, while the April increase was revised up by 41,000, from +253,000 to +294,000. Despite tight monetary policy, nearly 5.1 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike. In the first five months of 2023, more than 1.6 million jobs were created, and monthly employment growth averaged 314,000 per month.
The unemployment rate increased by 0.3 percentage points to 3.7% in May. The number of unemployed persons increased by 440,000, while the number of employed persons decreased by 310,000.
Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already holding a job, was unchanged at 62.6% in May. Moreover, the labor force participation rate for people who aged between 25 and 54 rose to 83.4%. While the overall labor force participation rate is still below its pre-pandemic levels at the beginning of 2020, the rate for people who aged between 25 and 54 exceeds the pre-pandemic level of 83.1%.
For industry sectors, professional and business services (+64,000), government (+56,000), and health care (+52,000) led job gains in May.
Employment in the overall construction sector increased by 25,000 in May, following a 13,000 gain in April. While residential construction added 2,500 jobs, non-residential construction employment gained 22,100 jobs in May.
Residential construction employment now stands at 3.3 million in May, broken down as 933,000 builders and 2.3 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 1,667 a month. Over the last 12 months, home builders and remodelers added 39,100 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,278,500 positions.
In May, the unemployment rate for construction workers increased by 0.3 percentage points to 3.8% on a seasonally adjusted basis. The unemployment rate for construction workers has been trending lower, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic.
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