Weekly economic review & outlook Hiring accelerates but labor supply still a concern
You Need to Know
Week in review
Sharp uptick in payroll gains for May
The economy added 559,000 jobs and the unemployment rate dropped to a pandemic low – but lack of labor supply continues to prevent even stronger hiring.
Business surveys show strong expansion
The ISM surveys for services and manufacturing both climbed for May despite difficulty in hiring and supply chain issues that are raising input prices.
Strong demand should drive higher optimism for small businesses
While difficulty filling job openings is an ongoing concern, further expansion of in-person activity should boost small business optimism modestly.
Monthly CPI gain expected to be moderate, but the annual gain should accelerate
While we expect the monthly increase in the consumer price index to be moderate, even this gain will boost the 12-month trend rate to the fastest pace since 2008.
Nonfarm payrolls rose by 559,000 for May, doubling the pace from April. As has been the case for several months, the sector of the economy that was hardest hit during the pandemic – leisure and hospitality – had the strongest job gains during May, up by 292,000. Other service areas, including education, health care, and information, also saw improved hiring. As an increasing number of state and local governments allow for more in-person activity, we should see a further service sector rebound in coming months.