US adds 559,000 jobs in May as fears of hiring slowdown fade

News comes one month after labor department announced US added just 266,000 jobs, far below the 1m gain expected for April

Last modified on Fri 4 Jun 2021 08.35 EDT

The US added 559,000 jobs in May as the coronavirus pandemic receded, shaking off fears of a substantial slowdown in hiring after April’s disappointing monthly report.

The Bureau of Labor Statistics said Friday that the unemployment rate had fallen to 5.8% from 6.1% in April, still significantly higher than the 3.8% unemployment rate recorded in February 2020 before Covid 19 hit the US but less than half its 14.8% peak in April last year.

The news comes one month after the labor department shocked economists by announcing the US had added just 266,000 new jobs in April – far below the 1m gain that had been expected.

April’s report led to sparring between the Biden administration and Republicans who claimed higher levels of unemployment benefits were keeping people from returning to work.

There are signs of a strong rebound across the US economy. Worker filings for unemployment benefits have dropped by 35% since late April and fell to a pandemic low of 385,000 last week, the labor department said Thursday.

Private sector employment increased by 978,000 jobs in May, according to ADP, the US’s largest payroll supplier. The figure was the strongest gain since the early days of the recovery. “Companies of all sizes experienced an uptick in job growth, reflecting the improving nature of the pandemic and economy,” said Nela Richardson, chief economist at ADP.

More than half of adult Americans are now fully vaccinated and business is booming in many sectors as state and local governments ease restrictions. But employers across the country are reporting worker shortages as the recovery strengthens. The US Chamber of Commerce said this week that labor shortages now represent “the most critical and widespread challenge” to US businesses. Nearly half of small-business owners had unfilled job openings in May, according to a survey from the National Federation of Independent Business.

Alongside evidence of strong growth, some economists are warning about the return of inflation. Prices on a broad range of goods from lumber to chicken have soared as demand has outstripped supply. In April a key inflation indicator – the personal consumption expenditures (PCE) price index – rose to 3.1% compared to last year, its highest level in 13 years.

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