U.S. adds modest 559,000 jobs, sign of more hiring struggles

WASHINGTON — U.S. employers added 559,000 jobs in May, an improvement from April’s sluggish gain but still evidence that many companies are struggling to find enough workers as the economy rapidly recovers from the pandemic recession.

Last month’s job gain was above April’s revised total of 278,000, the Labor Department said Friday. The unemployment rate fell to 5.8% from 6.1%.

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The speed of the rebound from the pandemic recession has caught employers off guard and touched off a scramble to hire. The reopening of the economy, fueled by substantial federal aid and rising vaccinations, has released pent-up demand among consumers to eat out, travel, shop, attend public events and visit with friends and relatives.

Many large chains, including Amazon, Walmart, Costco and Chipotle, have raised starting pay to better attract applicants. Yet so far, those efforts aren’t bearing much fruit. The number of people working or looking for work last month slipped slightly in May after three months of gains.

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The economy expanded last quarter at a robust 6.4% annual rate, and economists envision growth in the current quarter reaching a sizzling pace of 9% or more. All that growth, driven by higher spending, has raised inflation fears. But for now, it has mainly propelled demand for labor.

Job postings in late May were nearly 26% above pre-pandemic levels, according to the employment website Indeed. Government data shows that posted jobs are at the highest level on records dating back to 2000.

And consumers are opening their wallets. In April, they increased their spending after a huge gain in March that was fueled by the distribution of $1,400 stimulus checks. With more Americans feeling comfortable about staying in hotels and visiting entertainment venues, spending on services jumped.

In fact, service industries, including banking, retail and shipping, expanded at the fastest pace on record in May. The evidence suggests that consumers have begun to embark on a long-anticipated shift away from the sizable goods purchases that many of them had made while hunkered down at home to spending on services, from haircuts to sporting events to vacation trips.

The number of people seeking unemployment aid has fallen for five straight weeks to its lowest level since the pandemic began, a sign that layoffs are dwindling. There are still 15 million people receiving either federal or state jobless aid, though that number has also declined from roughly 20 million in February.