May’s jobs report is not great, but not necessarily bad. It does not help that the Labor Department revised down the otherwise great April and March jobs reports.
The economy only added 75,000 jobs, but the unemployment rate stayed at 3.6%.
Experts predicted the economy would add between 175,000 – 180,000 jobs, so the 75,000 came as a shock. Hiring within the mining, construction, and manufacturing sectors had little change. Leisure/hospitality, professional/business services, and health care are the only bright spots within the report.
Those working or looking for work stayed at 62.8%. Eric Moath at The Wall Street Journal noted that if adults keep “dropping out of the labor force, rather than flooding into it, that could choke off a key source of fuel for the economic expansion.”
On the bright side, the unemployment rate stayed at a 49-year low at 3.6%, but those in the prime-age participation group (25-54 years old) who have a job or looking for a job went down to its lowest number since September 2018 at 82.1%. Unemployment for those without a high school diploma remained at 5.4%.
Unemployment for black men, black women, and Hispanic men went down, but it went up for Hispanic and white women.
So the low unemployment rate and growth in the first quarter of 2019 did little to inspire people to jump into the job market.
Is wage growth keeping adults away from the market? While wages have grown, it has not improved much. May showed an increase of 3.1% from over a year ago. So it remained over 3%, but it fell from April’s 3.2%. It helps that “inflation remains muted” so prices of goods have not increased too much.
I know some people will point to the trade war, but The Wall Street Journal considers it “a wild card.” After all, we will always have a trade deficit with China. It would take a while for us to come close to import numbers with China. The Labor Department also gathered the May information before President Donald Trump threatened tariffs on Mexican imports.
The unemployment rate and wage growth stuck out to me. One would think that in a competitive job market that companies would make themselves more attractive by offering higher wages.
On the other hand, the not-so-good jobs report could lead to the Federal Reserve to cut interest rates. RSM US Chief Economist Joseph Brusuelas said that a cut in interest rates could happen since “the data is even bleaker as the softness that has defined employment in manufacturing has spilled over into the service sector.”
The revised down April jobs report and blah May report is not good for the GDP.
The first quarter saw a 3.2% GDP, the first time since the first quarter topped 3% since 2015.
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