The US economy added 223,000 jobs last month and the unemployment rate fell to a post-recession low of 3.8 percent, the latest jobs report from the Bureau of Labor Statistics showed on Friday. May continued the US labor market’s growth streak into its 92nd month, the longest such expansion in history. New jobs numbers were also revised upward by a total of 15,000 for the preceding two months, to 159,000 jobs in April and 155,000 in March. Retail, health care, and construction were the leading sectors adding jobs last month.
Compared to the previous year, the unemployment rate was half a percentage point lower in May, with the total number of unemployed persons reduced by 772,000. The number of long-term unemployed was little changed from April to May, standing at 1.2 million, but this figure had also declined by 476,000 over the past year. Underemployment remains an issue, with 4.9 million US workers working part-time who would prefer to be working full-time.
In the first five months of 2018, the workforce has grown by an average of 207,000 jobs per month, the Wall Street Journal adds, beating the average monthly growth of 182,000 in 2017. May’s numbers exceeded the expectations of economists surveyed by the Journal, who had expected 190,000 new jobs and a 3.9 percent unemployment rate. The last time the US recorded a 3.8 percent rate was in April 2000, and the last time before that was in 1969. The falling rate reflects a mix of positive and negative developments, however, as the labor force participation rate ticked down from 62.8 to 62.7 percent and the number of people not in the labor force increased by about 170,000.
Wage growth remains real the sticking point in the US labor market. Average hourly earnings in the private sector rose by 8 cents last month, to $26.92, for a year-over year increase of 71 cents or 2.7 percent. This increase represents a slight improvement over the persistent stagnation in wages in the years following the recession, but annual wage growth has not cracked the 3 percent mark since 2009.
Total nonfarm employment in the US grew by 200,000 jobs last month, while the unemployment rate held steady at a historically low 4.1 percent, according to January’s employment numbers from the Bureau of Labor Statistics. The highlight of last month’s jobs data, however, was the increase in average hourly earnings, which rose by nine cents to $26.74, following an 11-cent gain in December. Over the past year, average earnings increased by 75 cents or 2.9 percent. That’s the largest year-on-year gain since June 2009, Reuters reports, though the average workweek fell slightly in January to 34.3 hours, canceling out some of these wage gains.
Reuters adds that the strong jobs data increase the likelihood that the Federal Reserve will raise its benchmark interest rate several times this year, perhaps more than the three hikes it was already planning:
“This report supports the Fed’s contention that the jobs market is nearing full capacity and wage and inflation pressure has begun to make its way into the data,” said Marvin Loh, senior global market strategist at BNY Mellon in Boston. “With almost full odds priced in for a March rate hike, investors have moved towards the second, third, or even possible fourth rate hike this year.”
A separate set of Labor Department figures released earlier in the week found that total US employee compensation costs increased by 2.8 percent across 2017, Bloomberg reported, with several industries, including transportation and service occupations. showing increases of over 3 percent—a sign of a competitive labor market.
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US employers added 148,000 jobs in December for a total increase of 2.1 million jobs across last year, according to the latest employment data released by the Bureau of Labor Statistics on Friday. The monthly figure, while still reflecting a strong labor market, was considerably lower than the revised totals of 252,000 and 211,000 jobs added in November and October, respectively. Figures for these months were revised downward by a total of 9,000 in Friday’s BLS report. The annual increase was slightly below the 2.2 million jobs added in 2016. The greatest job gains last year came in the health care, construction, food service, and manufacturing sectors, whereas retail employment declined by 67,000.
The unemployment rate held steady at 4.1 percent, remaining at its lowest level since December 2000 for the third month running. The total number of Americans employed part-time who would prefer full-time work was “essentially unchanged” at 4.9 million in December but down 639,000 for 2017, while the number of long-term unemployed fell by 354,000 over the course of the year to 1.5 million last month. Average hourly earnings rose by 65 cents, or 2.5 percent, over the year.
Economists’ views of what this portends for the coming year differ, based partly on how much impact they think the household and corporate tax cuts passed by Congress last month will have on hiring and consumer spending. “The pace of job creation in 2017 suggests the expansion may have more room to run eight and a half years after the most recent recession ended,” the Wall Street Journal’s Eric Morath writes, while the tax cuts could “turbocharge growth,” as Joseph Brusuelas, chief economist at consulting firm RSM US, puts it. Glassdoor’s chief economist Andrew Chamberlain takes a different view:
A Houston-area neighborhood after Hurricane Harvey (Eric V Overton/Shutterstock)
The US economy lost 33,000 jobs in September due to the destructive impact of Hurricanes Harvey and Irma on Texas and Florida, falling far short of economists’ predictions of 90,000 new jobs, according to the latest figures from the Bureau of Labor Statistics, released Friday. The unemployment rate, however, fell from 4.4 to 4.2 percent, the lowest rate since February 2001, suggesting that the labor market is still fundamentally strong. Marketplace delves into the details of the report:
Last month’s drop was driven by huge losses in restaurants and bars, which shed 105,000 jobs, a sign of the damage to Florida’s tourism industry. Roughly 1.5 million people were unable to work last month because of the weather, the government said, the most in 20 years. Hourly workers who couldn’t work and missed a paycheck would have been counted as not working, thereby lowering September’s job total. That’s true even if those employees returned to work after the storm passed or will return.
The unemployment rate fell because it is calculated with a separate survey of households. That survey counted people as employed even if they were temporarily off work because of the storms. In fact, the proportion of adults who have jobs rose to 60.4 percent, the highest since January 2009. … “The weakness in payrolls was likely because of temporary hurricane effects. Other parts of the report were much stronger than expected,” wrote Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Average hourly wages rose 2.9 percent, but the Labor Department cautioned against reading too much into that figure, which was inflated by the fact that most of the jobs temporarily wiped out by the hurricanes were lower-paid. Overall, the Wall Street Journal reports, September’s jobs numbers leave the Federal Reserve on track to raise interest rates again later this year, undeterred by the disaster-induced dip in growth.
The US labor market continues to grow, but hiring slowed slightly in August, with employers adding 156,000 new jobs and the unemployment rate increasing slightly from 4.3 to 4.4 percent, according to the Labor Department’s monthly jobs report. The Associated Press examines the numbers:
Job growth in June and July was revised down by a combined 41,000, leaving an average monthly gain this year of a solid 176,000. Taken as a whole, Friday’s jobs report pointed to an economy that is still steadily generating jobs, though at a slower pace than it did earlier in the recovery from the recession. With fewer people looking for work, fewer jobs are being filled.
One persistent soft spot in the job market is that pay raises remain tepid. Average hourly pay rose just 2.5 percent over the 12 months that ended in August. Wage growth typically averages 3.5 percent to 4 percent annually when unemployment is this low. … Overall, hiring this year has averaged 176,000 a month, roughly in line with 2016’s average of 187,000. August was the 83rd straight month of job gains.
The report does not account for the economic impact of Hurricane Harvey, which came too late in the month to be reflected in the Labor Department’s surveys. Economists tell the AP the effects of the disaster will likely be visible in the months to come, with job growth first weakening and then rebounding as workers who were temporarily laid off are rehired.
Overall, August’s job numbers undershot economists’ expectations, CNBC’s Jeff Cox reports, but not enough to cause concern:
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According to the latest data from the Bureau of Labor Statistics, the US economy added 209,000 jobs in July, outperforming economists’ predictions of around 180,000. The unemployment rate fell from 4.4 to 4.3 percent as an already tight labor market tightened even further, while average hourly earnings rose 0.3 percent, making for a “decent” 2.5 percent increase on a 12-month basis, the New York Times reports:
“This is a Goldilocks report for the markets,” said Michael Gapen, chief United States economist at Barclays, meaning it was neither discouraging nor overheated. Citing the healthy payroll growth and steady gain in average hourly earnings in July, he added, “It really bodes well for macroeconomic growth.” Indeed, stock index futures jumped after the release of the report at 8:30 a.m., an indication Wall Street could post fresh records Friday. On Wednesday, the Dow Jones industrial average crossed the 22,000 mark for the first time. …
While faster wage growth is certainly good news for American workers, Wall Street worries that signs of real tightness in the labor market might force the Federal Reserve to tighten monetary policy more quickly. Very low interest rates have kept the financial markets buoyant, so any sign that the central bank’s easy-money policies are coming to an end could take some of the air out of stocks.
In the Wall Street Journal’s live analysis, Paul Vigna breaks down the wage numbers by profession to try to figure out why wages are still growing so slowly despite an otherwise strong labor market:
US nonfarm payrolls increased by just 138,000 last month and job creation numbers from March and April were revised downward by 66,000, but the unemployment rate fell to a 16-year low of 4.3 percent, according to the latest statistics from the Labor Department. Reuters has the details:
May’s job gains marked a sharp deceleration from the 181,000 monthly average over the past 12 months. Job growth is slowing as the labor market nears full employment. Last month’s job gains could still be sufficient for the Federal Reserve to raise interest rates this month. … The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.
The unemployment rate fell one-tenth of a percentage point to its lowest level since May 2001. It has dropped five-tenths of a percentage point this year. Last month’s decline came as people left the labor force. The survey of households from which the jobless rate is derived also showed a drop in employment.
The new jobs report comes less than two weeks before the Federal Reserve’s next policy meeting, when they will decide whether to raise the central bank’s benchmark interest rate. Observers say the Fed is likely to remain on course to raise rates again, despite the dip in job creation. But there is some disagreement among economists over whether this report indicates that the economy is slowing down or merely reflects a bump in the road, according to CNN Money: