Unemployment rate falls below 6%

The verdict is in on the May employment picture: The Labor Department says 559,000 jobs were added or recovered, while the unemployment rate fell 0.3% to 5.8%, a new post-pandemic low.

Improvement in hiring wasn’t quite as robust as many hoped, but it is good to see the unemployment rate slip below 6%, a new pandemic low. Upward revisions adding 27,000 jobs to the previous two months move in the right direction, but hardly seismic in impact.

So far this year, the U.S. economy has added an average of 478,000 jobs a month. As of the latest snapshot, 9.3 million Americans remain unemployed. At the current rate, it will take 19 months to get that number back to work.

There are other signs of strain seen beneath the headlines of the report. They include 5.3 million working part-time but would like full time work. Another 6.6 million are out of the labor force (not working or looking for work), but would like to have a job.

There had been fears of a repeat of April's disappointing jobs report, which came in with just 266,000 jobs added, as reported initially. That number was revised up slightly to 278,000. Total revisions for March and April amount to a gain of 27,000, which doesn't substantially change the recent recovery narrative.

Leading the way was the leisure and hospitality sector, including bars and restaurants, with nearly 300,000 jobs added. The sector remains 2.5 million jobs shy of pre-pandemic levels. On the other end of the spectrum, job losses were seen in retail and construction. Manufacturing added 23,000 jobs, still 509,000 jobs shy of February 2020's level.

This follows word that new claims for unemployment benefits have dropped for five straight weeks.

Watch Mark discuss unemployment claims with CBSN anchor Tanya Rivero:

Strains associated with reopening

In some ways, the hiring rebound over the past year, as part of the broader reopening of the economy, ends up being a good news, not-so-good news story. The reason is that businesses and consumers are being constrained, at least to some degree, in engaging as fully as they would like because of challenges associated with supply chains and labor. Nevertheless, these challenges seem like a small price to pay in the battle against COVID-19 along the way to resuming activities previously taken for granted.

Because the payrolls gain was somewhat restrained, the Federal Reserve should feel a bit less urgency about boosting interest rates, at least based on recent data. The future path of wage gains, and inflation more broadly, remain things to watch for central bankers, business leaders and consumers alike. If the economy continues to heal and if inflation remains restrained in the intermediate term, that should be something of a continued sweet spot for investors.

A good time to look for work

For workers, the current mismatch between employers and employees is an opportunity to improve one’s career prospects. It is a good time to look for work whether one is very early in a career path or more senior. In so doing, they might find employers are willing to pay more and to provide more flexibility than before the pandemic. That’s not a bad position for a worker to be in.

What is your take on the current situation? Are you working, or planning to look for work, or an employer looking to hire? Or are you staying on the sidelines for now? Please let me know in the comments section below.

Mark Hamrick is senior economic analyst and Washington Bureau Chief for Bankrate.com. 

Follow on Twitter: @Hamrickisms