JUNE 7, 2021 –NEW JOBS IN MAY, BUT NOT ENOUGH TO FORCE A POLICY CHANGE
Employers added 559,000 jobs in May, up from a revised 278,000 in April. The unemployment rate fell to 5.8% from 6.1% last month. It is an improvement, but still less than economists expected. In March, 785,000 jobs were added. The slow hiring pace could delay a full labor recovery to next year, say economists. Sadly, there is a record level of job openings, but people are not rushing to fill them.
9.3 million people remain unemployed, with employment levels 7.6 million jobs short of pre-pandemic levels. Initial jobless claims fell last week by 35 percent to 385,000 from 405,000 the prior week, the fifth week in a row of declines.
The disappointing numbers do not have enough momentum to force the Fed’s hand to tighten monetary policy yet. The Fed has been talking about reducing the rate of their bond-buying programs, but details have not been released. The Fed has been buying securities at a rate of $120 billion a month to hold down long-term borrowing costs until the economy recovers more. Fed Chair Powell said the Fed will likely hold corporate bonds to maturity, rather than selling them back to the market. They will sell bonds and ETF holdings in a gradual and orderly way.