Econ Corner Title Graphics - May 2024 (2)

U.S. employment is expected to increase by 211,000 jobs

KEY TAKEAWAY: Employment in the U.S. is forecasted to continue to rise in May 2024 by 251,000 jobs while the unemployment rate is expected to remain at 3.9%. 
LABOR MARKET OVERVIEW (1)-1
Econ Corner - May 2024 Employment Forecast +211K Estimated Jobs
Econ Corner - May 2024 Unemployment Forecast No Change at 3.9%
Econ Corner - May 2024 Job Opening +3.7%
Econ Corner - May 2024 Job Applications No change
Econ Corner - May 2024 Unemployment Claims - 1.8%
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Employment 

  • Our Expectations: We have been anticipating that elevated interest rates, stubborn inflation, and slowing business activity would start to take hold in the labor market over the next several months - effectively slowing down job growth. April’s lower job creation may have been the turning point, and the results for May might validate that outlook or leave things further muddled. 

  • Diving in: Additional data from last month’s payroll survey also indicates a possible a slowdown in the labor market. Weekly hours decreased slightly to 34.3 and estimated real wages have fallen over the past three months. This has led to increased uncertainty about the direction of inflation and the labor market, which could potentially slow business expansion and economic growth. However, despite this, recent employment gains coupled with a stable labor force participation rate appear to be sufficient to maintain positive forward momentum.

 

Unemployment Outlook 

  • Breaking it Down: The U-6 unemployment rate, which includes discouraged, underemployed, and unemployed workers in the country, increased to 7.4% in April, returning to the upward trend seen from December to February. On the other hand, the U-3 unemployment rate, which includes only the number of unemployed people actively seeking a job, reversed its 0.1% drop in March returning to 3.9% in April. 

  • What Does This Mean?: The uptick in the U-3 unemployment rate, along with a steady labor force participation rate, indicates the labor market that is cooling. Nevertheless, it’s important to keep in mind that the unemployment rate was at historic lows this past year, making some increases in the U-3 expected, even with a soft landing.

 


Key Indicators 

  • What We're Watching: There are three main factors that are contributing to the predicted decrease in job creation and a steady rate of unemployment. These factors include the number of monthly job openings, job applicants, and the number of unemployment claims filed. Data from Geographic Solutions' and the U.S. Department of Labor during the May survey period shows the following:
     
    • The number of job openings increased by 3.7%  
    • The number of Job applicants has remained unchanged 0.0%  
    • The total amount of unemployment claims declined by 1.8%  

    Analyzing these figures helps to paints a clearer picture of what to expect from the upcoming labor market report. Based on the numbers we can expect to see a slowdown in the labor market in May compared to earlier this year.  

Employment & Unemployment Forecast

Will the US labor market continue to grow in the coming months? If so, what’s causing this recent growth?

Yes. Although job growth will be slow, recent employment gains coupled with an uptick in labor force participation rate seem to be enough to maintain positive forward momentum.  

 

How will the surging labor market impact the Federal Reserve’s decision to cut interest rates?

The large job growth seen over the last year gives the Federal Reserve room to maintain or raise rates without pushing the economy into a recession.

Despite the recent growth of jobs, why is the labor market still tight?

The labor market may give the appearance of being tight to some, but here's why it's not.  Typically a tight labor market means that the unemployment rate maintains a low rate after a period of decline, job growth slows, and wage growth picks up. Recent growth in jobs contradicts that we're in a tight labor market.

Geographic Solutions derives its employment forecast and unemployment rate forecast from internal data on the number of job openings, searchers, and employment and unemployment applications filed on Geographic Solutions' state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).

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