May Jobs Report Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s reaction to this morning’s U.S. Bureau of Labor Statistics report on employment conditions in May.

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“The May employment report showed much stronger job growth than had been anticipated, with nonfarm payroll growth at 172,000 jobs and April’s growth revised higher to 179,000, bringing the three-month average growth in payrolls to 188,000. The unemployment rate and the labor force participation remained unchanged at 4.3% and 61.8%, respectively. 

“The sectors with big job gains in May were health care, leisure and hospitality, and local government. Combined, these three sectors’ gains accounted for 160,000 of the total 172,000 jobs, a 93% share. By contrast, there were job losses in the financial sector, and the report showed that finance has lost 107,000 jobs since last May.

“Wage growth slowed to a 3.4% pace in May. That slowdown is impacted by the shift in job growth from higher-paid to lower-paid sectors over the past year. It is notable that wage growth is running below the pace of inflation, putting a strain on household budgets.

“While the job market is not showing broad-based strength, overall, there is surprising resilience. Meanwhile, inflation is too high. MBA continues to anticipate that the Fed’s next move will be a rate hike, and that means mortgage rates are unlikely to drop anytime soon.”