Businesses say they can’t find enough workers to hire. The pace of Americans moving off the unemployment rolls is slowing. And a top Federal Reserve official is warning that job trends in May might look “odd.”
All of that suggests that the next monthly U.S. employment report, which will be released Friday morning, may not show the robust growth that President Joe Biden needs to help pass his sweeping agenda.
On the heels of April’s sluggish job growth, which shocked economic forecasters and sparked debate over a nationwide worker shortage, the May data will be closely watched for an indication of whether something significant is holding back the labor-market recovery — such as what Republicans say are overly generous federal unemployment benefits — or whether the previous data was nothing more than a one-month blip.
Democrats have downplayed the concerns, maintaining that the path back to full employment was always going to be winding and stacked with challenges. And economists are predicting the report will show 630,000 jobs were created in May, a robust number. But while Biden has been polling strongly on his handling of the economy, a second straight month of slower-than-expected job creation could embolden critics of his multitrillion-dollar infrastructure spending plans and raise fears that the labor market is facing a long road back to normal.
“There is growing anxiety about inflation, the economy overheating, unemployment not coming down fast enough and businesses that can’t find jobs,” said Brian Riedl, a former economic aide to Sen. Rob Portman (R-Ohio) and other GOP lawmakers. “Another bad jobs report may further the narrative of a White House overextending itself on stimulus and in over its head.”
The outlook for the May jobs report remains highly uncertain. Most economists are optimistic that the numbers will be strong as the country continues to reopen. But many also remain wary of the possibility that the same pressures that led to only 266,000 jobs being added in April — child-care issues and fear of the virus, among them — could keep growth low through May as well.
“All those tensions, they’re not actually going to go away even for the next jobs report,” Dallas Fed President Robert Kaplan said at a recent technology conference.
“We think you’re going to see another odd or unusual report,” Kaplan said. “We know businesses are telling us they got plenty of demand, but they can’t find workers, either skilled or unskilled.”
Some early data signal that job creation may not be roaring back. The Real-Time Population Survey, a tool backed by the Dallas Fed that aims to track unemployment trends more quickly than the Labor Department, saw a slowdown in the labor-market recovery in May, with employment ticking down to 71.1 percent from 71.8 percent the month before.