Not as many new jobs are coming from high-paying industries as the recreational boating industry might prefer, but the U.S. economy added a surprisingly high 172,000 in May, providing further evidence that the job market is healthy and stable.

The Labor Department’s report today, which included a steady 4.3% unemployment rate, also revised March’s job gain upward by 29,000, to 214,000, and lifted April’s total by 64,000, to 179,000. The labor market has now had six-digit gains in four of the past five months.

“This was a very strong jobs report for the third month in a row,” Ian Wyatt, chief economist at Huntington Commercial Bank, told Trade Only Today. “We have added over four times more jobs (565,000) over the past three months than we did in the prior 12 months (126,000).

“Conditions in the economy are improving, and growth is driven by a few key factors: business investment spending in data centers/chips/power generation, higher-end consumers with very healthy personal balance sheets spending on travel and dining out, and the tax bill helping consumers and encouraging business investment,” Wyatt said. “Reflecting the high investment spending, wage growth was strongest in blue-collar sectors like utilities, oil and gas, construction and manufacturing — core lower-end boat buyer demographics.

“In addition to strong wage growth, job growth was strong in construction, driven by specialty trade contractors, which is part of the data center story, and durable goods (autos) manufacturing. Higher oil prices were likely a factor driving down employment in air and truck transportation, furniture manufacturing and department stores. On net, the jobs report and other recent data point to an economy on better footing than at the beginning of the year.”

The Labor Department said the leisure and hospitality category added 70,000 jobs; local governments added 55,000; and the health care sector added 35,000. The growth in the hospitality category could reflect hiring in advance of the FIFA World Cup, which will hold matches in 11 U.S. cities, from Atlanta to Los Angeles, and from Boston to Miami.

Former NMMA president Thom Dammrich said the current economy is an environment in which people are keeping their jobs but feel poorer. Both major national consumer confidence indexes were weaker again last month, with the University of Michigan’s Consumer Sentiment Index falling to the lowest level in its 74-year history.

The Labor Department said average hourly earnings for workers on private, non-farm payrolls rose 12 cents, or 0.3%, in May, to $37.53, and earnings were up 3.4% on a year-over year basis, keeping them below the 3.8% annual rate of inflation in the most recent reading of the Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred measure of the cost of living.

“In this environment, current boaters and the businesses that serve them will continue to do well, but sales of new boats are likely to remain weak,” said Dammrich, now an adviser at Global Marine Business Advisors. “With [PCE Price Index] inflation at 3.8% and wages increasing 3.4%, real wages are declining and household discretionary spending budgets are being squeezed as non-discretionary spending on higher energy [bills] and gasoline are rising.

“The labor market remains resilient, and the likelihood of a recession in the near term is reduced,” he added. “Job growth is coming from service industries, including health care, leisure and hospitality, and state government, and not from construction, manufacturing or other industries where large capital expenditures, which create even more jobs, are more prevalent.”

For the boating industry, export consultant Julie Balzano said, the jobs number is only one piece of the puzzle.

“The data suggests a labor market that remains resilient, but one where job growth is still concentrated in a relatively narrow group of sectors,” Balzano, founder and principal consultant at Florida-registered Global Connect Marketing Services told Trade Only Today. “Boats are discretionary purchases, so what really matters is whether people feel confident enough to spend money on them. Even if more people are working, many households are still feeling pressure from higher everyday costs. When groceries, insurance, housing, gas and other expenses continue to rise, consumers tend to think twice before making a major purchase.

“From my perspective, strong employment is certainly positive news, but I would be watching consumer confidence and spending behavior just as closely,” she added. “People may be employed, but that does not automatically mean they are ready to buy a boat.”

The labor force participation rate — the percentage of the population that is in the workforce — held steady from the previous month at 61.8%, although that level is the lowest since October 2021.

The Fed’s policymaking committee will next meet June 16-17, and economists’ consensus is that the central bank will make no change in its benchmark interest rate. The meeting will mark a changing of the guard, as Kevin Warsh takes over as chairman from Jerome Powell, who remains a Fed governor and a member of the rate-setting Federal Open Market Committee.

“Rate cuts are very unlikely for the foreseeable future,” Wyatt said. “Inflation remains well above the Fed’s target, and with oil prices remaining high, there is likely more inflation coming as the effects of oil prices work their way through supply chains.

“In addition, a stronger labor market adding over half a million jobs in the past three months gives the Fed little reason to cut to stimulate the labor market. We expect the Fed will hold rates steady for the foreseeable future, as many voices on the committee are starting to discuss the possibility of a hike. We do not expect a hike in the near term, but also think the new chair will find little, if any, support on the 12-member committee for rate cuts.”

Dammrich agreed that with inflation reaccelerating and the labor market strong, the Fed “will find little justification to cut interest rates and will continue to lean toward the next move being an interest rate increase. It is not likely that Warsh will be able to convince the other voting members to reduce rates at this time.”

Balzano said she hopes that the Fed will proceed carefully, hold rates where they are for now and continue watching the data before making any significant moves.

“The job numbers remain solid, unemployment is relatively stable, and inflation has not completely gone away,” she added. “From the outside looking in, there does not seem to be a compelling reason to rush into additional rate cuts right now.

“There is also added uncertainty from rising energy costs and ongoing geopolitical tensions. Those factors can quickly affect transportation, manufacturing and consumer spending.

“For the recreational boating industry, lower interest rates would certainly be welcome,” Balzano said. “They can help with boat financing, dealer inventory costs and overall consumer confidence. That said, I do not think anyone wants to see rates come down so quickly that inflation becomes a bigger problem again.”

Earlier this week the Trump administration proposed new tariffs to replace the ones that the Supreme Court struck down in February: 10% to 12.5% levies on 59 countries and the 27-member European Union that could take effect as soon as next month.

The argument that the administration is making as a basis for them is that these governments haven’t taken action against the trade of goods produced with forced labor or aren’t enforcing the laws they have in place. The administration is also reportedly working on additional tariffs related to countries’ manufacturing practices.

A public comment period has begun and will continue until July 6. A public hearing is scheduled for the following day. Balzano said the boating industry should pay attention and make its voice heard during the comment period.

“Our industry relies on a global supply chain,” she said. “Even boats built in the United States often contain imported engines, electronics, components, hardware, fabrics and raw materials. As a result, tariffs can have consequences that extend far beyond the companies importing those products directly.

“I encourage my clients to understand their potential exposure and stay informed as these proposals move forward,” she added. “I also strongly encourage them to join and support industry trade associations like the NMMA and others. Many of these organizations are already leading advocacy efforts on behalf of the recreational boating industry. There is power in numbers, and advocacy is one of the most important roles trade associations play.

“At the end of the day, policymakers need to understand how these decisions affect manufacturers, suppliers, dealers and consumers throughout the boating industry.”

Dammrich said he is certain the NMMA is working with the boating industry to comment on the proposed tariff increases “and make the case that increasing the cost of new boats and the cost of boating will harm U.S. jobs in this uniquely American industry. But I suspect it will be hard to convince this administration not to follow through with their tariff plans.”