America labour market strengthens amid shortage of workers
Nonfarm payrolls in America jumped by 559,000 in May, the US Bureau of Labor Statistics revealed on Friday.
The reading fell short of the market’s expectation of 650,000.
The figures are well up from the 278,000 recorded in April, which was revised from 266,000.
The rate of unemployment in America fell from 6.1% to 5.8% over the same time period.
The figures suggest the labor market has strengthened despite fears that a shortage of workers were keeping the economy held back.
US nonfarm payrolls were announced as the US economy appears to be rebounding strongly as restrictions are eased. Additionally, concerns remain over the possibility of inflation.
Robert Alster, CIO at investment management firm Close Brothers Asset Management comments: “The Fed and market alike have been waiting for this nonfarm print with bated breath. April’s figures were a shock, coming in at a quarter of the expected increase despite stellar economic growth and otherwise-positive employment data. Now we are seemingly back on track, and signals are pointing towards a bright future for the US.”
“But there are still some key questions to be answered. There are vacancies in the US job market, and as people return to the workforce it’s unclear why those vacancies are not being filled. At best, it’s simply a matter of time. At worst, there’s a mismatch between the labour needed and the labour available.”
“As firms like McDonalds and Walmart increase wages to tempt workers back faster, it adds fuel to the US’ inflationary fire. While a rise in disposable income and consumer spending would be positive, if wage growth prompts a persistent increase in inflation then the Fed may be forced to step in with a monetary fire extinguisher, risking dampening the recovery before it’s really begun.”
Many businesses have been struggling to find employees as demand picks up with many offering higher wages in an effort to lure workers in.
Jobs figures in March came in below expectations, leading to concerns over labour shortages and the subsequent impact on the US economy’s recovery.
The May report from US Bureau of Labor Statistics comes as the Fed will again put its spotlight on its monetary policy, where it may consider easing some of stimulus measures since the beginning of the pandemic.