The U.S. economy added 339,000 jobs in May, once again exceeding expectations, which were forecasted to be around 195,000 jobs. On the month, the unemployment rate ticked up slightly to 3.7%, according to the latest data from the U.S. Bureau of Labor Statistics, released this morning.
The leisure and hospitality sector continued to trend up during May, adding 48,000 jobs, most of which – 33,000 – came from foodservices and drinking establishments. Leisure and hospitality had added an average of 77,000 jobs per month over the prior 12 months, showing some cooling in May. However, employment in this industry is inching back toward pre-pandemic levels; the sector is now 349,000 – or 2.1% - below February 2020 levels. This is a marked improvement from April, in which foodservices and drinking establishments added 25,000 jobs and employment levels were 2.4% below pre-pandemic numbers.
Overall, May marked the highest level of job gains since January’s 472,000. The unemployment rate has been below 4% since January 2022, signaling a remarkably resilient economy as macroeconomic pressures persist. This swift pace of job growth, however, may be contributing to stubbornly high inflation rates and hindering the Fed’s target to reduce inflation rates to 2% from the current 4.9%.
That said, the continued low unemployment rate could also be driving strong restaurant sales. Q1 exceeded sales and traffic expectations at many public brands across segments, for instance, as consumers have proven they’re willing to accept higher menu prices. Several chains attributed stronger staffing levels for Q1’s momentum and many expect that continue into the higher-volume summer months. Some chains, including Jack in the Box, noted they’re back to pre-Covid staffing levels, which has contributed to increased operating hours and driven sales, traffic and higher customer satisfaction scores.
These staffing improvements aren’t without their own pressures, however. In May, average hourly earnings continued to rise and were up 11 cents, or 0.3%. Over the past 12 months, average hourly earnings have increased by 4.3%.
Contact Alicia Kelso at [email protected]
