US Continues To Add Jobs As Wage Gains Slow

US job gains continued in May but at a slower pace, and rapid wage increases cooled as well, a welcome sign for US policymakers trying to ease red-hot inflation.

President Joe Biden, who has been pummeled in opinion polls as prices have spiked, said the employment data released Friday showed the world's largest economy weathering the inflation surge while maintaining healthy growth.

"We've laid an economic foundation that's historically strong," Biden said in comments in his home state of Delaware, emphasizing the resiliency of the US economy despite rising consumer prices.

"Now we're moving forward to a new moment where we can build on that foundation -- build a future of stable, steady growth -- so we can bring down inflation without sacrificing all the historic gains we've made."

American employers added 390,000 jobs last month, the Labor Department reported, a sign of a slowdown in hiring but still a better-than-expected result amid the ongoing shortage of workers.

Employers have struggled to fill open positions, which has pushed wages higher, and average hourly earnings rose another ten cents compared to April, to $31.95.

The pay rate is 5.2 percent higher over the last 12 months ended in May, but that is slightly slower than the 12-month increase posted in April, the report said.

That could be good news for the Federal Reserve, which has launched an aggressive campaign to raise interest rates to combat the highest US inflation in more than 40 years.

"Average hourly earnings growth remains moderate relative to last year," former White House economic advisor Jason Furman said on Twitter. "That's the most important number in this release for inflation and it's mostly reassuring."

Ian Shepherdson of Pantheon Macroeconomics noted that the annualized rate of increase in the latest three months was just 4.3 percent -- the smallest since April of last year.

"The downshift from the 6.1 percent peak in January is clear, and the rate will slow further," he said, which "will bring a sigh of relief at the Fed."

The US central bank began raising the benchmark borrowing rate in March and has made clear the increases are likely to continue the rest of the year, including two big hikes in June and July that together would take the level to 1.75 percent from zero, where it sat throughout the pandemic.

Biden acknowledged that American families are anxious about sky-high prices for essential goods such as food and gasoline, which has reached a record high at the pump, and again said much of the blame lies with Russian leader Vladimir Putin and his invasion of Ukraine.

"I've been upfront with the American people from the outset, that there would be a cost here at home of Putin's decision to brutally and savagely invade a sovereign nation. But as your president, I remain committed to doing everything in my power to blunt the impact on American families," Biden said.

Fed Chair Jerome Powell has highlighted the shortage of workers as a worrisome factor in the world's largest economy, with nearly two job openings for every unemployed person in the labor force as many people who left jobs during the pandemic have not returned.

The government data showed the participation rate edged up very slightly to 62.3 percent, a sign more workers could be coming off the sidelines to rejoin the workforce, which would ease pressure on wages.

Kathy Bostjancic of Oxford Economics said she expects more people to return to the job market, which would affect wages in the second half of the year.

But she cautioned "it will take time for labor demand and supply to realign, keeping the pace of wage growth elevated and well above the pre-pandemic rate of around 3 percent."

The jobless rate held steady at 3.6 percent for the third consecutive month, just a tenth of a point above the pre-pandemic level in February 2020, the Labor Department said.

The unemployment rate for Asians fell to 2.4 percent from 3.1 percent, but for Blacks and Hispanics, the rate increased to 6.2 percent and 4.3 percent, respectively.

Restaurants and hotels that were decimated due to Covid-19 showed a strong recovery in May, adding 84,000 positions, the data showed. The sector is still down 1.3 million jobs compared to the pre-pandemic level.

Jobs in business services increased by 75,000, and the government added 57,000, but retail employment fell by nearly 61,000, the report said.