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According to recent data updates, US companies added at least 390,000 new jobs in May, which was higher than the threshold projected.
Though May’s gain remains the weakest in a year, the number from the US Labor Department topped economists’ expectations for a 325,0000 increase in new jobs by the end of May. For the third month in a row, the unemployment rate in the US remained at 3.6 percent.
As fast-rising prices heighten fears of a potential downturn, the labor market condition in the world’s largest economy is being monitored by experts.
Some corporations have announced plans to slow or freeze recruiting in recent weeks. Walmart and Amazon, among other retail powerhouses, have admitted to rushing through their hiring process early in the year, thus resulting in lower profits as rising prices proved more challenging to pass on to customers.
Meanwhile, electric carmaker Tesla is reportedly halting hiring and has warned that up to 10% of its paid workers may be laid off. In a communication to employees obtained by Reuters, Tesla CEO Elon Musk expressed his dissatisfaction with the economy.
Consumer and financial market sentiment have recently deteriorated. According to data, the annual inflation rate in the United States reached 8.3 percent in the year ending in April, a slight decrease from the rate recorded in March but the highest since 1981.
According to analysts, job growth in May remained steady but slower pace than the previous year. Although, experts have attributed the recent slow-paced hiring to the high expenses due to the surge in energy prices precipitated by the war in Ukraine.
As Pantheon Macroeconomics’ chief economist, Ian Shepherdson predicts, he expresses curiosity to see if firms have reduced recruiting in anticipation of consumers cutting down on their spending.”
After months of highly robust gains, many analysts had predicted that job growth would decrease. According to the Labor Department, employment in the United States had essentially rebounded to where it was before the Covid-19 pandemic occurred in March 2020.
The leisure and hospitality sector, which is still recovering from substantial cuts imposed during the Covid limitations, showed the most significant increase in new positions last month, with 84,000 new jobs added. Retail payrolls declined by 61,000, although the number of jobs is still more than in February 2020 before the pandemic.
After leaping forward last year, US President Joe Biden said Friday that the economy was entering a “new period of calm, steady growth” and that Americans should “expect to see more moderation.”
Biden explained that as far as monthly employment reports go, the US is not likely to see this kind of blockbuster report like it has so far in 2022. However, he expresses his delight at how stable the gains have been and how the stability puts the US in a strong position to deal with inflation.
When asked about Mr. Musk’s remarks, Mr. Biden said that other companies, such as Ford, were announcing plans to hire thousands more people as they invest in electric vehicles.
“I guess he’ll have a lot of luck on his voyage to the moon,” he remarked.
Pay has been rising at a quicker rate than it has in years as companies fight for workers. Last month, the average hourly wage in the United States increased by 5.2 percent to $31.95 (£25.50) compared to a year before. Pay growth, on the other hand, is falling behind the rising cost of living and fell for the second month in a row in May.
To combat inflation, the US Federal Reserve, like other central banks worldwide, is boosting interest rates. Such actions often stifle economic growth by raising borrowing costs and lowering demand.
