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Job creation missed expectations but still picked up steam in May as the economy added 559,000 new workers, driven largely by bars, restaurants and hotels re-hiring thousands of employees.
The Labor Department said in its Friday report that employers added 559,000 jobs last month and the unemployment rate fell to 5.8%, missing Wall Street's expectations for a gain of about 650,000. Still, it marked a vast improvement from April, when the economy added a revised 278,000 jobs – much smaller than the 1 million forecast by Refinitiv economists.
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Leisure and hospitality, one of the industries hit hardest by the coronavirus pandemic, led in terms of job growth, with gains of 292,000. Restaurants and bars accounted for 186,000 of the total, while hotels added 34,600 new positions – evidence that more Americans are venturing out as vaccination levels increase and business restrictions ease. Amusements, gambling and recreation hired 57,900 new workers, while employment in the arts, entertainment and recreation industry increased by 71,700.
There are roughly 2.5 million fewer jobs in the leisure and hospitality industry than there were in February 2020, before the pandemic began.
"While shortages may make finding workers more difficult, they don't appear to be stopping jobs growth in the hard-hit sector," said Daniel Zhao, Glassdoor senior economist. "For now, the rising leisure and hospitality earnings seem to be the strongest evidence that labor shortages are happening, but the report doesn't point to a clear reason for these shortages."
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Education and health services, another source of job creation, surged by 87,000 with gains across the board. About a quarter of those – 22,500 – stemmed from health care, while 40,700 came from educational services, reflecting the continued resumption of in-person learning and other school activities across the country.
Social assistance rounded it out with a solid 23,300 jobs last month.
"Notable job gains occurred in leisure and hospitality, in public and private education, and in health care and social assistance," the Labor Department said in its report.
Transportation and warehousing picked up 22,900 jobs, and employment in the professional and business services ticked up by 35,000, with gains in accounting and bookkeeping services (14,100) as well as administrative and support services (17,800).
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The government also helped boost payrolls last month, hiring 67,000 new workers. State governments accounted for most of those gains, onboarding 45,000 employees in May. Local governments added 33,000 workers, while the federal government lost about 11,000.
Still, some sectors actually shed workers last month: Construction employment fell by 20,000, reflecting a job loss in nonresidential specialty trade contractors, while retail lost 5,800 workers.