The U.S. economy added 390,000 new jobs in May, as employment growth continued to be one of the few bright spots in the U.S. economy. The unemployment rate remained at a healthy 3.6%, according to the Department of Labor employment report on June 3.
But rising prices for gasoline and consumer goods continued to be a drag on the economy. The average price at the pump rose by 11.47% in May, from $4.21 per gallon at the end of April to $4.67 at the end of May. Rising food prices also continued to squeeze consumers, with prices up 10.8% year-over-year through the end of April, according to the U.S. Bureau of Labor Statistics.
The Consumer Price Index (CPI), which is a common measure of inflation, rose 0.3% in April – and 8.3% over the previous 12 months. But for all items except food and energy, the CPI was up 6.2% for the most recent 12-month period. Rising vehicle prices have also contributed to the inflation spike, with new vehicle prices up 13.2% over the previous 12 months and used vehicle prices up 22.7%.
After a dismal start to the year, the stock market leveled off in May, with the S&P 500® Index rising 0.01% for the month – and 0.18% including dividends. But the NASDAQ continued to slump, dropping 2.05% in May. For the year, the S&P 500 was down 13.30% through the end of May (12.76% including dividends), while the NASDAQ was down 22.78%.
Manufacturing operations have continued to report strong activity, according to the Institute for Supply Management (ISM). In its June 1 report, ISM said overall manufacturing growth has continued for 24 consecutive months, with 15 of the 18 industries it tracks reporting growth for the month, while only one industry – furniture and related products – reporting a decline. According to the report, hiring issues improved and demand for products remained strong, but supply issues continued to constrain production expansion.
U.S. stocks level off
Despite continuing concerns over inflation, the war in Ukraine, and the accelerating monetary tightening policy of the Federal Reserve (Fed), the S&P 500 Index managed a 0.01% gain in May, from 4,131.93 at the end of April to 4,132.15 at the May close. The total return, including dividends, was up 0.18% for the month but down 12.76% through the first five months of the year. (The S&P 500 is a market-cap-weighted index that represents the average performance of a group of 500 large capitalization stocks.)
The NASDAQ Index continued to drop in May, down 2.05% for the month, from 12,334.64 at the end of April to 12,081.39 at the May close. Year-to-date, the NASDAQ was down 22.78%. (The NASDAQ – National Association of Securities Dealers Automated Quotations – is an electronic stock exchange with more than 3,300 company listings.)