- In May, the United States added more jobs than economists estimated, as part of a robust recovery.
- But the retail sector lost 61,000 jobs in May.
- This is another example of Americans shifting away from spending on goods and towards services.
Even as fears of economic turbulence loom, labor market data tells a different story: The country is creating very good jobs.
In May, the United States added 390,000 non-farm payrolls, down from April’s gain of 436,000. That’s above the 325,000 jobs that economists polled by Bloomberg estimated the country would add.
The recovery is also quite widespread.
“The report shows that the labor market is ignoring fears of a potential slowdown,” Daniel Zhao, senior economist at Glassdoor, told Insider.
But, while nearly every major industry saw jobs added in May, that was not the case for retail, which saw a net loss of 60,700 jobs, with most of the loss coming from stores. of miscellaneous goods. It shows how Americans are shifting their spending priorities away from big-box stores with inflated prices — and instead investing that money in great experiences.
As the chart above shows, leisure and hospitality led the way in job growth. While leisure and hospitality saw a net gain of 84,000 jobs in May, that’s still 1.3 million payrolls below the February 2020 level – a sign of the recovery yet to come.
Nick Bunker, director of economic research at Indeed Hiring Lab, said it may be some time before U.S. leisure and hospitality returns to pre-pandemic levels in February 2020. One reason for that could be that there isn’t as much demand as there used to be, he added.
When Everything Costs More, Americans Want to Spend on Experiences
The loss of big box jobs makes sense given recent lackluster revenue calls, Bunker pointed out. The drop may also be due to concerns about excess staff, he said.
“It’s a little surprising ‘that the losses’ show up so quickly and so broadly in the data — but that probably seems to be the culprit for what we’re seeing there,” Bunker said.
Bunker said if there was a slowdown in transportation and warehousing, which saw a net gain of 47,000 in May, it could show “we’re seeing the labor market impacts of a shift in consumption “.
Consumer spending is shifting from goods to services, according to Zhao: “We should naturally see a decline in retail trade and a resurgence in industries like travel and tourism.”
There were already signs of a retail slowdown. The number of retail job openings plummeted in April 2022. Big box retail stores reported weaker than expected profits, and retailers may even start slashing items again as they are stuck with excess inventory.
Part of this may be because US customers are acting with their wallets and resisting rising costs. With gasoline prices hitting record highs and inflation still hovering around 41-year highs, it makes sense that Americans are spending less, especially amid fears that consumers are burning through the savings they have already.
They’re still willing to shell out the cash for a summer break, though. Vacations are also getting more expensive, and high gas prices mean some Americans are considering fewer or shorter trips this summer, but that’s not stopping them from looking for time. TSA checkpoint travel figures show people are still traveling at rates close to pre-pandemic levels. Spending on goods is fairly stable, according to the Bureau of Economic Analysis, but spending on services is growing.
It’s part of a “normalization,” according to Zhao, where the economy is moving from a pandemic era to a more post-pandemic era, and away from high retail spending.
“We’re not in the phase we were in last year, where the economy was really accelerating dramatically,” Zhao said. “Now we’re settling into this new normal, where growth might be a bit slower – but this slowdown is more of a normalization than a sign that we’re about to fall off a cliff.”
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