By CHRISTOPHER RUGABER
AP Economics Writer
WASHINGTON (AP) — U.S. employers added 559,000 jobs in May, an improvement from the sluggish gain seen in April but still evidence that many companies are struggling to find enough workers as the economy rapidly recovers from the pandemic recession.
The job gain last month was above the revised total for April — 278,000 — the Labor Department said Friday, yet well short of employers’ need for labor. The unemployment rate fell to 5.8% from 6.1%.
The speed of the rebound 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 for eating out, travel, shopping, attending public events and visiting friends and relatives.
Many large chains, including Amazon, Walmart, Costco, and Chipotle, have raised starting pay to attract applicants. So have other employers: Wages jumped in May for a second straight month, a sign that companies are redoubling their efforts to find workers. And the average length of the work week remained high, suggesting that businesses are working their current staffs for longer hours to try to meet rising customer demand.
Yet even so, the number of people working or looking for work last month slipped slightly in May after three months of gains.
The bulk of last month’s job growth was at hotels, restaurant and bars, which gained 220,000 positions. Retailers lost jobs for a second straight month. And despite a hot housing market, the construction industry shed 20,000 jobs, its second straight month of cuts, likely a result of supply shortages and soaring costs for building materials.
The economy expanded last quarter at a 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 fears of inflaction.
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 show that posted jobs are at the highest numbers on record, according to figures dating 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 going to 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.
The fading of the pandemic produced a disconnect between companies and the unemployed. While businesses are rushing to add workers immediately, many of the unemployed are either seeking better jobs than they had before the pandemic, still lack affordable child care, worry about contracting COVID-19 or have decided to retire early.
That mismatch resulted in the sharp slowdown in hiring in April, when employers added far fewer jobs than economists had forecast.
Though the economy still has 8.2 million fewer jobs than it did before the pandemic struck, job postings in late May were nearly 26% above pre-pandemic levels, according to the employment website Indeed. Government data show that posted jobs have reached their highest number on record, according to figures dating to 2000.
Many businesses blame a $300-a-week federal unemployment benefit for discouraging some of the jobless from taking work. Republican governors in 25 states have responded by cutting off that benefit early, starting this month. The benefits are scheduled to end nationally on Sept. 6.
Becky Frankiewicz, president of the temporary staffing firm Manpower Group’s North American division, said many of the firm’s clients are raising pay and benefits to attract more applicants. Some of these companies, particularly those in in manufacturing and warehousing, are also trying other tacks, like paying their workers weekly or even daily, rather than every two weeks. Manpower is also encouraging its clients to not wait a day after conducting an interview to offer an attractive candidate a job.
“People have options,” she said. “Companies have to offer speed in cash, speed to hire and a lot of flexibility in how they work.”
For now, though, there are signs that many of the unemployed remain cautious about seeking jobs.
On Thursday, Tony Sarsam, CEO of SpartanNash, a grocery distributor and retailer, said on a conference call with investors that the company took part last month in a job fair with 60 companies that had 500 jobs to fill.
“Only four candidates showed up,” Sarsam said.