1 of 2 | President Joe Biden praised data showing the unemployment rate has stayed below 4% for more than a year. Data were mixed, however, with a better-than-expected uptick in new hires and an increase in the unemployment rate to 3.7% in May. Photo by Ting Shen/UPI | License Photo
June 2 (UPI) -- Hiring in the U.S. economy surged last month, though the number of people without a job passed the 6 million mark, the Labor Department reported Friday.
The Labor Department confirmed the strength in new hires that was reported earlier in the week by private payroll processor ADP. A concern for ADP, however, was that wage growth is stagnant, particularly for those changing jobs.
The Labor Department reported that non-farm payrolls increased by 339,000 in May. Gains were broad-based, from construction to social services.
Data, however, were mixed elsewhere. In May, the number of people who were without a job for less than five weeks increased by 217,000 to 2.1 million, offsetting a decline from April. The number of people without a job for between 15 and 26 weeks increased by 179,000 to 858,000, while those off payrolls for longer than that remained static.
Those figures helped explain that, while new hires were strong, there were changes for those off the payrolls. The unemployment rate increased by 0.3% to reach 3.7% last month.
"The number of unemployed persons rose by 440,000 to 6.1 million," the report from the Labor Department read.
President Joe Biden saw a silver lining, however, in the latest data. Under his watch, the unemployment rate has stayed below 4% for 16 months in a row.
"The last time our nation had such a long stretch of low unemployment was in the 1960s," he said.
Hiring is a concern for a Federal Reserve trying to cool the economy with successive rate hikes. More jobs mean more discretionary spending, driving both demand and inflation higher.
Craig Erlam, a senior market analyst for the brokerage OANDA, said Fed officials will need to see some concrete weakness in the labor market to feel confident that the path to its 2% target rate for inflation is clear.
"That means much fewer new jobs for a period, more modest wage growth, and in all likelihood a slight increase in unemployment," he said.
Friday's report was somewhat mixed, though the recent Beige Book, a summary of economic conditions across the various Fed districts, showed pressure mounting in the labor market.
The Fed meets again later this month to consider its next steps on lending rates.