U.S. Payroll Employment Reaches New All-Time High, May U. Rate Steady at 6.3 Percent
- The May Payroll Employment Survey showed a gain of 217,000 jobs. April was revised down slightly.
- The Unemployment Rate for May was unchanged at 6.3 percent.
- Average Hourly Earnings increased by 0.2 percent in May and are up 2.1 percent over the last year.
May payroll job growth came in slightly-better-than expected at +217,000 for the month. Revisions to March and April were minimal. The May jobs numbers are a double shot-in-the-arm for the U.S. economy. First, they confirm that the rebound from the weather-induced poor performance over the winter is durable. Second, May’s job growth puts U.S. payroll employment at a new all-time high. May’s total payroll employment of 138,463,000 is 98,000 jobs higher than the January 2008 pre-recession peak. The unemployment rate held steady in May at 6.3 percent. The household employment survey, which feeds into the unemployment rate, showed a gain of 145,000 jobs. The payroll survey and the household survey are reasonably well correlated over the medium term. But on a month-to-month basis they can diverge significantly. The civilian labor force increased by 192,000 workers in May after showing a big 806,000 worker drop in April. The labor force numbers remain somewhat quirky, reducing the reliability of the unemployment rate as a measure of central tendency of the U.S. labor market. Average hourly earnings were up 0.2 percent in May, and up 2.1 percent over the previous 12 months. The rise in earnings over the previous year is not inflationary. We expect to see average hourly earnings trending up over the year ahead. This may put more pressure on overall inflation given recent weak productivity growth. If productivity growth renormalizes, then the expected rate of wage growth in the near-term is not inherently inflationary. Average weekly hours for all workers has been relatively steady over the last two years, near the May level of 34.5.
Construction employment was up 6,000 in May. We except to see ongoing gains as both residential and commercial projects increase. Manufacturing employment gained 10,000 jobs in May. The steady improvement in manufacturing employment, enduring into mid-cycle, has been a pleasant surprise. Wholesale trade gained 9,900 net new jobs in May, while retail was up 12,500 jobs. Transportation and warehousing employment was up 16,400. Financial services job growth is still flattish, up only 3,000 for the month. Sizeable job growth came from business and professional services, up 55,000 in May. Education and healthcare added a strong 63,000 net new jobs. Leisure and hospitality employment was up nicely by 39,000. The government sector is still stuck in neutral due, in part, to the federal spending sequester. The government sector added 1,000 net jobs in May.
Market Reaction: U.S. equity markets opened with gains. The 10-Year T-bond yield is down to 2.56 percent. NYMEX crude is up to $102.81/barrel. Natural gas futures are down to $4.69/mmbtu.
For a PDF version of this Comerica Economic Alert click here: Employment 06-06-14.