The economy added 559,000 jobs last month, double April's disappointing total, and the unemployment rate ticked down to 5.8 percent from 6.1 percent, according to data released Friday by the Bureau of Labor Statistics.
While the headline jobs number falls short of economists' expectations that predicted a total as high as 1 million, it is further indication that the economy is grinding into high gear, as widespread vaccinations allow for the reopening of businesses across all sectors. Half of Americans are now fully vaccinated, and confirmed coronavirus cases in the United States have fallen to levels not seen since March 2020, according to an NBC News analysis.
“No other major economy in the world is growing as fast as ours,” President Joe Biden said in a speech Friday. “None of this success is an accident. It isn’t luck.”
Still, Biden cautioned that while “America is finally on the move again,” there would continue to be some "bumps" along the way. "You can’t reboot the world’s largest economy like flipping on a light switch,” he said.
A slew of positive employment data this week pumped optimism into labor market observers after ADP reported Thursday that private payrolls rose by 978,000 last month, and the Department of Labor said initial unemployment claims fell to 385,000, their lowest level since the pandemic hit — though still double the pre-pandemic average.
"After the disappointing jobs report in April, it isn’t really a surprise that [Friday's] numbers missed expectations," said Steve Rick, chief economist at CUNA Mutual Group. "People are gunning for a very fulsome recovery, which isn’t quite in the works yet. That said, the path ahead really does continue to look encouraging as we slowly make progress to return to the 3.5 percent unemployment rate we were seeing before the beginning of the pandemic."
Yet businesses are still facing worker shortages, as people contend with a lack of child care and fear of contracting the virus, and others take early retirement or reconsider their career trajectory. Some Republican governors have said the emergency federal unemployment benefits have contributed to a lack of incentive to return to work. Already, 25 states have said they will withdraw the $300 weekly benefits before their official expiration in September.
The economy is also being squeezed by bottlenecks in the supply chain, as manufacturers and suppliers try to ramp up production capacity to meet the new demand. Shortages have led to soaring prices for products ranging from computer chips to lumber, wheat, and chicken wings.
"The supply constraints are problematic, but it doesn't mean that's going to prevent the economy from continuing to recover," said Ryan Sweet, senior economist at Moody's Analytics.
Friday's monthly labor market report also included revisions for April, which rose from 266,000 to 278,000; and for March, which fell from 916,000 to 785,000 jobs gained.
"Upward revisions adding a total of 27,000 jobs to the previous two months move in the right direction but are hardly seismic in impact,” said Mark Hamrick, senior economic analyst at Bankrate. Nonetheless, "the mood has changed," he said. "The economy has healed as a rising share of the U.S. population has been vaccinated, fostering the lifting of Covid-19 restrictions, which leads to more spending on both goods and services."
While the latest positive metrics point to a robust economic recovery, the rebound also raises concern for investors and market observers who fear the Federal Reserve could begin pulling back on its "easy money" policies.
The sluggishness in hiring, along with higher commodities prices, has even led to discussion of "stagflation," where economic output stagnates at the same time as inflation spikes, creating a spiral of decreased purchasing power for consumers and generating even slower economic growth.