The May Jobs Report: Steady, But Nothing To Write Home About
The jobs news in May was good, but far from great.
Going into May’s jobs report, there were a wide variety of expectations regarding where the economy as a whole actually was, and what that meant for the jobs market. Several economic indicators seemed to suggest that we may have faced a slowdown in May, and the fact that May was also the second full month that the Federal Budget sequester was in effect led many to expect that we’d start seeing a slowdown in hiring in May. Wednesday’s released of the ADP jobs report, which sometimes correlates with the Labor Department’s numbers and sometimes doesn’t, suggested that the labor market was healthier in May than many analysts fear. As it turns out, the BLS report that was released today showed that the jobs market remains steady and healthy, but still nowhere near where it ought to be:
Total nonfarm payroll employment increased by 175,000 in May, and the unemployment rate was essentially unchanged at 7.6 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, food services and drinking places, and retail trade.
Both the number of unemployed persons, at 11.8 million, and the unemployment rate, at 7.6 percent, were essentially unchanged in May. (See table A-1.)
Among the major worker groups, the unemployment rates for adult men (7.2 percent), adult women (6.5 percent), teenagers (24.5 percent), whites (6.7 percent), blacks (13.5 percent), and Hispanics (9.1 percent) showed little or no change in May. The jobless rate for Asians was 4.3 percent (not seasonally adjusted), little changed from a year earlier. (See tables A-1, A-2, and A-3.)
In May, the number of long-term unemployed (those jobless for 27 weeks or more) was unchanged at 4.4 million. These individuals accounted for 37.3 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 1.0 million. (See table A-12.)
The civilian labor force rose by 420,000 to 155.7 million in May; however, the labor force participation rate was little changed at 63.4 percent. Over the year, the labor force participation rate has declined by 0.4 percentage point. The employment-population ratio was unchanged in May at 58.6 percent and has shown little movement, on net, over the past year. (See table A-1.)
On the job creation front, which is what really matters, things were good, but not great:
Total nonfarm payroll employment increased by 175,000 in May, with gains in professional and business services, food services and drinking places, and retail trade. Over the prior 12 months, employment growth averaged 172,000 per month. (See table B-1.)
Professional and business services added 57,000 jobs in May. Within this industry, employment continued to trend up in temporary help services (+26,000), computer systems design and related services (+6,000), and architectural and engineering services (+5,000). Employment in professional and business services has grown by 589,000 over the past year.
Within leisure and hospitality, employment in food services and drinking places continued to expand, increasing by 38,000 in May and by 337,000 over the past year.
Retail trade employment increased by 28,000 in May. The industry added an average of 20,000 jobs per month over the prior 12 months. In May, general merchandise stores continued to add jobs (+10,000).
Health care employment continued to trend up in May (+11,000). Job gains in home health care services (+7,000) and outpatient care centers (+4,000) more than offset a loss in hospitals (-6,000). Over the prior 12 months, job growth in health care averaged 24,000 per month.
Within government, federal government employment declined by 14,000 in May. Over the past 3 months, federal government employment has decreased by 45,000.
Employment in other major industries, including mining and logging, construction, manufacturing, wholesale trade, transportation and warehousing, and financial activities, showed little or no change over the month.
There were also revisions to the March and April jobs numbers. March’s numbers were revised upward from a net 138,000 jobs created to a net 142,000 jobs created, while April’s numbers were revised downward from 165,000 net jobs created to 149,000 net jobs created. Compared to previous months this is a fairly modest adjustment, but it is the first one in awhile where there’s been a net downward adjustment, in this case of 12,000 jobs between the two months. Looking at individual job sectors, we can clearly see the impact from the sequester in the Federal Government numbers, and it’s unclear how many of those “job losses” are actually furloughs, but they don’t seem to be having any real impact on the economy as a whole. The most substantial growth seems to be occurring in Professional and Business Services and Retail, although it is somewhat concerning that a substantial part of the growth in the first area seems to be occurring in Temporary Help Services, a development which suggests that we may see the market give back some of these job gains in the coming months. It’s also slightly concerning that construction employment seems to be slowing down despite reports of renewed health in the real estate market.
On that note, this chart from Wonkblog provides an interesting look at how various industries have fared both during the Recession, and after it ended:
Interestingly, the industry that has recovered the most quickly is Mining and Logging, although that account for an ever smaller part of the total jobs market. Construction, of course, remains mired in the aftereffects of the Housing Crash. It’s likely to be quite some time before that segment of the economy fully recovers.
It’s not all bad, of course, as CNBC notes, we seem to be avoiding the spring-into-summer slowdown that we’ve experienced in recent years:
Despite anticipation of a spring-into-summer swoon, the U.S. economy continued to create jobs at a relatively steady pace in May, adding 175,000 positions as the unemployment rate ticked higher to 7.6 percent.
Economists expected nonfarm payrolls to grow by 170,000 in the month after an initial reading of 165,000 in April, which was lowered to 149,000.
“The employment report does not look too bad after all, which should soothe recent concerns over a slowing for the US economy in response to domestic fiscal policy and external headwinds,” Andrew Wilkinson, chief economic strategist at Miller Tabak, said of the report.
The May payrolls number has been both low and volatile over the past several years, with an average initial reading of 69,000 and an average upward revision of an additional 99,000 positions.
Other jobs numbers had pointed to a slowdown.
The Institute for Supply Manufacturing surveys of both the manufacturing and nonmanufacturing sectors pointed to flat growth, while the ADP/Moody’s Analytics survey of private payrolls earlier this week came in considerably lower than expected.
In other words, May’s jobs report was good, and better than many people expected, but far from great. It was below the level it needs to be at to keep up with population growth, and remains at a rate that would take us until well after Barack Obama is out of office before we’re back at pre-recession employment levels. The report beat expectations, but it’s not too hard to beat expectations when expectations are so low.