Job Growth Slows - May Jobs Report

Xavier Trudeau
Juin 5, 2017

Most other indicators have shown no slowdown in hiring. "Increasingly, businesses' number one challenge will be a shortage of labor". "The pool has diminished considerably".

"Political uncertainty in Washington is another factor holding back the job market", said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo.

Duncan said the unemployment rate dropped to the lowest it has been in 16 years.

Not only did employers slow their hiring during May. The industry has added an average of 22,000 jobs per month so far this year, compared to an average monthly gain of 32,000 in 2016. As recently as 2015, job growth averaged 226,000 a month. Pantheon Macroeconomics' chief economist, Ian Shepherdson, observed that "employers are still able to find the people they want, though surveys and anecdotal evidence strongly suggest that it is becoming harder to find qualified staff".

In April and March, the number of new jobs created was reduced by a combined 66,000, the Labor Department said (https://www.bls.gov/news.release/empsit.nr0.htm).

The department's latest employment report suggests that eight years after the Great Recession, job growth is slowing after an extended period of gains. Adjusted for that effect, several economists say, the gain would have been 0.3 percent.

More than 400,000 people stopped looking for work entirely.

Contributing to the trend has been the continuing retirements of America's vast generation of baby boomers.

In this Thursday, Jan. 19, 2017, photo, a construction worker.

A rise in overall unemployment in the first quarter of the year, StatsSA said, is a pattern observed annually, usually following a reduction in unemployment in the final three months (Q4) of each year.

Average hourly earnings for private-sector workers increased by 0.2 percent from a month earlier in May.

Even though the jobs report did not meet expectations, the May figure was still strong enough to absorb new workers entering the labor force, based on Fed projections. And manufacturers let go of 1,000.

Retail continued its recent streak of losing jobs, declining by 6,100. Government was also a drag on job creation, with 9,000 fewer positions. And its proposed tax cuts have come only in a one-page outline, without the details that would need to be vetted by Congress.

The Bureau of Labor Statistics announced on Friday that the unemployment rate had fallen to 4.3%, the lowest level since 2001, all but guaranteeing that the Federal Reserve will raise interest rates at its next meeting this month. But in this case that fell in a different week from May 15, when many workers get paid and would receive any raises.

For now, some companies that are hiring have no plans to raise pay much. One of them is Atlanta-based Workout Anytime Companies, which runs 24-hour-a-day gyms.

The leisure and hospitality industry added 31,000 net new jobs in May, down from 58,000 the previous month.

Cohn said Friday on Bloomberg Television that "we still think there's an terrible lot that we in the administration can do" on taxes, regulation and infrastructure to bring people back to the workforce and boost wages. "Not because they are anxious about sales, but because they are trying to assess whether the president and Congress will be successful in passing pro-growth policies".

Many economists see the labor market as reaching full employment, or the point when virtually all job seekers have found work, but wage inflation is still modest.

The unemployment rate declined to 4.3%, its lowest level during this economic expansion, though it was driven by a sequential decline in labor force participation to 62.7% from April's 62.9%.

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