Hiring rebounds in May; wages rise sharply

The U.S. economy added 559,000 new jobs in May, according to data released Friday by the Labor Department.

That's better than the employment gains seen in April but marked the second straight month hiring numbers came in below Wall Street's consensus forecast.

While hiring in the overall services sector continued to rebound following the massive layoffs seen during the worst of the health crisis, the retail sector lost 5,800 jobs last month.

And construction jobs also saw an outright decline - losing 20,000 jobs in May; that's odd given the current housing construction boom.

Further clouding the labor picture, factory floors, which had been forced to shut down due to chip shortages, swung in May to a net hiring gain after a net loss the month before.

There's been a debate as to why hiring has cooled in recent months with some blaming a lack of workers, not a lack of jobs. Reasons given for the worker shortage range from a combination of childcare complications, generous unemployment benefits and lingering health safety concerns.

Bankrate senior economic analyst Mark Hamrick sees the labor shortage as a short-term hiccup in a rebounding economy.

"The problems that employers are having finding well-qualified workers will resolve themselves, or itself, through the end of the year. First of all, we're having supply constraints not only with workers, but also with supply, the supply chain disruptions and shortages that we're having are the functions of the unprecedented reopening of the economy. And the situation with the workforce is much the same. We've basically had a shotgun reopening of the economy here and sort of getting those pieces back in order is a complicated task."

Republican governors in 25 states think they have the answer. They are terminating the extra $300 weekly unemployment checks coming from the federal government starting next week.

Some employers are responding to their inability to hire by raising starting pay.

That's leading to bigger paychecks. Average hourly earnings rose last month, with the year-over-year gain now standing at 2 percent.

Overall, the closely watched unemployment rate fell to 5.8 percent in May from 6.1 percent in April.