May Jobs Report Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s reaction to this morning’s U.S. Bureau of Labor Statistics report on employment conditions in May:

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“Job growth was stronger than anticipated in May, with growth averaging 341,000 per month over the last 12 months, adding to the momentum thus far in 2023. This includes upward revisions to already strong job growth in March and April. Even though the pace of layoffs has picked up, many businesses, particularly in transportation, healthcare, and hospitality, continue to have strong demand for workers. Data earlier this week showed that job openings in April increased to over 10 million postings once again.

“Despite the increase in job growth, two data points in this report show signs of somewhat weaker labor demand. Wage growth has slowed to 4.3% over the past 12 months, and the unemployment rate ticked up to 3.7%. The increase in unemployment was not caused by an increase in the labor force participation rate. The household survey, which is the basis for the unemployment rate, is telling a very different story than the establishment survey this month, one showing weakness in employment, the other strength.

“Several Federal Reserve officials have signaled that they are likely to hold rates steady at their upcoming June meeting but are unlikely to reduce rates anytime soon. This somewhat mixed jobs report is likely to support that approach.

“The housing market continues to struggle against a lack of supply. A strong job market helps housing demand, particularly in the face of challenging affordability.”