Unemployment rate increases slightly to 3.7 percent

The unemployment rate increased slightly in May in spite of the economy adding more than 300,000 jobs.

The unemployment rate moved from 3.4 percent in April to 3.7 percent last month, according to new numbers released Friday by the U.S. Bureau of Labor Statistics.

“The unemployment rate increased by 0.3 percentage point to 3.7 percent in May, and the number of unemployed persons rose by 440,000 to 6.1 million. The unemployment rate has ranged from 3.4 percent to 3.7 percent since March 2022,” the BLS report said.

The strong labor market has complicated the Federal Reserve’s efforts to bring down inflation, which remained around 5 percent in April. In May, the Federal Reserve announced a 10th straight interest rate hike, with an increase of 25 basis points. The current federal target rate of 5 to 5.25 is the highest since 2007.

Federal Reserve officials, including Chairman Jerome Powell, predicted to the labor market to soften in the second half of the year. In May, the number of unemployed persons grew by 440,000 to 6.1 million.

The labor force participation rate stayed at 62.6 percent in May. It continues to trail the pre-pandemic level of 63.3 percent.

After adding 253,000 jobs in April, the labor force grew by 339,000 jobs in May.

Professional and business services led the job gains, adding 64,000 positions, ahead of the 43,000 jobs in April.

Government employment grew by 56,000. The sector had averaged 42,000 in gains in the past year.

Healthcare added 52,000. Hospitality employment increased by 48,000. Construction saw an increase of 25,000. Transportation and warehousing added 24,000 positions.

The average hourly earnings rose by 11 cents, or 0.3 percent, to $33.44. Earnings are up 4.3 percent in the past year.

The average workweek edged down by 0.1 hour to 34.3 hours. In manufacturing, the average workweek remained at 40.1 hours and overtime grew by 0.1 hour to 3.

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