Headline Numbers:

The month of May produced another disappointing jobs report from the Bureau of Labor Statistics. Nonfarm payrolls increased by 559,000 which was 91,000 below expectations. The unemployment rate fell by 0.3% to 5.8%; economists expected 5.9% for May.

The number of unemployed fell by 496,000 to 9.3 million and the number of permanent job losers in May was 1.9 million higher than Feb. 2020.

The Labor Force Participation Rate (LFPR) was little changed at 61.6%, 1.7% lower than Feb. 2020. The employment-population ratio was 58.0%, 3.1% lower than Feb. 2020. Persons employed part time for economic reasons was unchanged at 5.3 million, 873,000 higher than Feb. 2020. Persons not in the labor force who want a job but were not actively looking was unchanged at 6.6 million, 1.6 million more than Feb. 2020. These figures did not improve anywhere near expectations. Since the LFPR increased only 0.1%, the unemployment rate declined 0.1% more than expected despite total employment missing expectations.

Nonfarm payroll is still down 7.6 million or 5.0% over the last 15 months from pre-pandemic levels in Feb. 2020.

Highlighted Sectors:

Private sector jobs increased 492,000 with service sector jobs accounting for 99.4% (489,000) of all private jobs added.

Leisure and hospitality increased 292,000 with almost two-thirds in food services and drinking places; leisure and hospitality still down 2.5 million, or 15.0% from Feb. 2020.

Manufacturing increased 23,000 after being down 38,000 in April, a two-month net loss of 15,000. Employment in manufacturing is down 509,000 from Feb. 2020.

Transportation and warehousing added 23,000, down 100,000 from Feb. 2020.

Construction fell 20,000 and is 225,000 lower than Feb. 2020.

Government grew 67,000, which was 12.0% of the total nonfarm increase.

Oil and gas extraction was little changed, falling 1,200.

Earnings, Revisions, Miscellaneous:

Average hourly earnings rose 15 cents to $30.33, (2.0% Y-o-Y increase) following an increase of 21 cents in April; average workweek was 34.9 hours for third month in a row.

March was revised up 15,000 while April was revised up 12,000, nowhere near expectations. This confirms that April’s substantial disappointment was not merely a fluke but demonstrated the structural problems government has created in the labor market.

Prime-Age (25-54) Employment increased only 220,000 and the unemployment rate fell 0.3%.

New entrants to the job market who were unemployed fell 100,000.

All six measures of unemployment fell by roughly the same amount, between 0.2% and 0.4%.

The 10-year Treasury yield fell 1.2 basis points immediately following the report, indicating investors do not see the report as inflationary.

Abridged Summary:

May’s job report was a disappointment. Unemployment “bonuses” are keeping people out of the work force and slowing the recovery. While the labor market is improving, the rate of improvement has slowed considerably.


  • The 25 states with unemployment bonuses should end the program as Texas has announced.
  • Reduce regulatory barriers and employment taxes to facilitate hiring.