U.S. Job Growth
Accelerates in May
The U.S. Labor
Market Report covering the national employment situation in May showed a
rebound in employment growth with a gain 280,000 jobs. The unemployment rate
edged up to 5.5%, but that was a positive development resulting from 397,000
additional workers entering the labor force. Also encouraging, the average
hourly wage increased by $0.08 in May to $24.96. Over the year, average hourly
earnings were up by 2.3%.
The employer payroll survey reported that total nonfarm employment in the United States increased by 280,000 jobs in May. Accompanying last month’s job gain were revisions to the March figure (revised up from 85,000 jobs to 119,000) and the April number which was revised down slightly from 223,000 to 221,000. With these revisions, the gains in March and April combined were 32,000 more than previously reported. Over the past three months, job gains have averaged 207,000 per month.
On
a year-to-year (YTY) basis, U.S. employment expanded by nearly 3.1 million
jobs, an increase of 2.2%. Every major industry sector added jobs over the year
with the exception of mining and logging. The mining sector continues to scale
back payrolls in response lower energy
prices and the resulting decline in energy sector investment. The fastest
growing sectors in YTY percentage terms were construction (4.5% or 273,000
jobs); administrative and waste services (4.0%, 340,200 jobs); and professional
and technical services (3.5%, 293,500 jobs). In numerical terms, health care
services and leisure and hospitality added the most jobs with employment gains
of 519,000 and 439,000 respectively.
New
record high levels of employment were reached last month in the following
super-sectors: trade, transportation and utilities, professional and business
services; education and health care; leisure and hospitality and other
services.
The
unemployment rate ticked up to 5.5%, but for a good reason: more people entered
the labor force last month hopeful of finding a job. The year ago unemployment
rate was 6.3%; since 1990, the unemployment has averaged 6.1%. According to the
Federal Reserve, the natural rate of unemployment currently stands at 5.38%.
This figure is used to estimate the amount of slack in the labor market – reaching
it would signal the economy has reached full employment.
Other
labor market indicators in the May report continued to show improvement as
well. The more comprehensive U-6 unemployment rate, which counts part-time
workers who would prefer full-time work and persons who would like to work but
have given up looking for a job, was unchanged over the month but at 10.8% was
down from the year ago rate of 12.1%.
Individuals
out of work are spending less and less time on the unemployment rolls. The median
duration of unemployment in May fell to 11.6 weeks from 14.5 weeks a year ago.
Improvements in the labor market have also helped bring down the share of
workers who have been jobless for 27 weeks or more. In May, that share was
28.6% versus 34.3% in May 2014. Over the past 12 months, the number of
long-term unemployed persons (not counting individuals who have given up
looking for work) has fallen by 849,000. In addition, the shift toward
full-time work has been steady. The share of full-time workers relative to
part-time workers is fast approaching normal levels, reaching 81.6% in May. The
long-run average is 82.0%.
Summary: The pace of job
growth picked up in May with the largest monthly job gain so far this year. The
unemployment rate rose last month, but for a good reason: more people were out
looking for work. Hiring was wide spread among most industries and hourly
earnings edged up. The strength of the labor market in May sends a strong
signal that momentum in the economy is holding up.
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