Key takeaways:
- Job growth slowed significantly, with nonfarm payrolls adding only 139,000 jobs in May, below expectations and previous months, while private sector hiring hit its lowest pace since March 2023 at just 37,000 jobs.
- Temporary help services suffered major losses with a decline of 20,000 jobs, continuing the sector’s ongoing trend of job cuts and highlighting challenges in the staffing industry.
- AI talent demand surges despite tech layoffs as 90% of companies deploy AI solutions but struggle to find qualified workers, creating the world’s top tech skills shortage even as other tech positions face cuts.
Nonfarm payroll added 139,000 jobs, as reported in the latest report from the Bureau of Labor Statistics (BLS). This is below April’s revised figure of 147,000 (down from the previously reported 177,000) and March’s revised figure of 120,000 (down from 185,000). The downward revisions mean employment in March and April combined is 95,000 lower than previously reported.
Most of the employment growth for May was in health care (+62,000), leisure and hospitality (+48,000), and social assistance (+16,000). Meanwhile, temporary help services declined significantly by 20,000 jobs, fueling its trend of job losses.
Other highlights from the latest BLS report include:
- The unemployment rate held steady at 4.2% over the month, with 7.2 million people unemployed.
- The employment-population ratio declined by 0.3 percentage point to 59.7%, and the labor force participation rate decreased by 0.2 percentage point to 62.4%.
- The number of people employed part time for economic reasons changed little at 4.6 million.
- The number of people not in the labor force who currently want a job held at 6.0 million.
Private employment adds just 37,000 jobs
ADP’s National Employment Report showed a rise of only 37,000 jobs in private sector employment for May, marking the lowest pace of hiring since March 2023. This represents a significant slowdown from April’s revised figure of 60,000 jobs (down from the initially reported 62,000).
May gains were strongest in leisure/hospitality (+38,000) and financial activities (+20,000). Several sectors showed job losses, including professional and business services (-17,000), education and health services (-13,000), and natural resources/mining (-5,000).
“After a strong start to the year, hiring is losing momentum,” said Dr. Nela Richardson, chief economist at ADP. “Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers.”
Year-over-year pay gains remained steady in May, with job-stayers seeing 4.5% wage growth (unchanged from April) and job-changers experiencing 7.0% wage growth (up from April’s 6.9%).
AI talent shortage drives tech hiring
While headlines continue to spotlight tech sector layoffs, a different story is emerging for staffing leaders: companies are aggressively competing for AI talent as they race to implement artificial intelligence solutions.
“Despite reports of continued layoffs, companies are still looking to fill certain tech positions,” said Jason Pyle, President of Harvey Nash USA & Canada. “While overall tech investments have slowed, companies can’t afford to slow down in the race to deploy AI.”
Pyle pointed to a new study showing that although 90% of organizations have begun implementing AI technologies, they’re facing significant challenges in recruiting qualified professionals to manage these systems. AI expertise has become the most pressing technical staffing challenge globally, affecting more than half of businesses.
“Companies are looking to hire AI talent to accelerate AI adoption as quickly as they can.”
