The economy may be headed for a long-expected downturn. According to the monthly Employment Situation Summary released this morning by the Bureau of Labor Statistics, there were 390,000 jobs added in May. The labor market is still gaining, but at a lower rate than the reported 428,000 jobs added in April. The report outlines a slight decline from last month’s numbers, suggesting employers are slowing down their hiring efforts.
According to the Job Openings and Labor Turnover Summary, released Wednesday by the BLS, there were 6 million separations reported in April, 4.4 million of which were voluntary. The report showed that layoffs and discharges dropped to a low of 1.2 million, and the market maintained a net gain in employment across nonfarm sectors. The data suggests that separations, or quits, are not being driven by employees leaving the workforce, but by people switching jobs.
The labor market is still on track to reach pre-pandemic levels in the coming months, but it is cooling down as Americans finally see the effect of inflation on businesses. How will businesses handle growing economic concerns as profit margins continue to dip through the summer months? Hiring freezes are already on the table for big tech companies who are trying to get ahead of a potential recession. For some, layoffs have already started.
Inflation has eased slightly, coming down to 8.3% in April from March’s 40-year high of 8.5%. It is still at a decade high and shows no signs of letting up. High mortgage rates, increased by the Federal Reserve to combat a recession, have adequately deterred home buyers. Currently, a standard 30-year fixed mortgage rate hovers just under 6%, much higher than in January 2021, when rates were below 3%.
Leisure and hospitality showed the most growth, increasing by 84,000 jobs. Within the sector, food services and drinking places added 46,000 and accommodation added 21,000 jobs. Professional and business services added 75,000, with accounting and bookkeeping rising by 16,000 and computer systems design and related services rising by 13,000. Employment in transportation and warehousing increased by 47,000, construction increased by 36,000, and state government education added 36,000 jobs. Health care also rose by 28,000, including a 16,000 job gain in hospital employment. Retail trade declined by 61,000 jobs in May.
