The US economy added only 38,000 jobs in May, following a revised 123,000 gain in April, according to a report published by the Bureau of Labor Statistics. 7.4 million Americans who wanted a job couldn’t find one. While subject to revisions, May saw the weakest pace of hiring in more than five years.
Revisions showed that US employers hired a combined 59,000 fewer workers in April and March than previously estimated. May’s weak job growth and downward revisions to previous reports bring the average monthly job gains over the past three months to 116,000.
The unemployment rate, which is obtained from a separate survey of households, dropped to 4.7 per cent from 5 per cent in April. A fall in the jobless rate was primarily driven by Americans dropping out of the labour force, rather than strong hiring.
The number of long-term unemployed – those individuals who have been out of work for 27 weeks and more – fell by 178,000 to 1.9 million. The number of people unemployed for less than 5 weeks fell by 338,000 to 2.2 million.
The number of people working part-time, because they couldn’t find a full-time position, a measure known as part-time for economic reasons, rose by 468,000 to 6.4 million.
A broader measure of unemployment, which includes Americans working part-time for economic reasons and too discouraged to look for work, stood at 9.7 per cent, unchanged from April. The so-called U-6 unemployment rate has been below, but close to 10 per cent since September 2015.
458,000 Americans left the labour force last month, pushing down the labour force participation rate – a measure that indicates the number of Americans in work or actively looking for a job – to 62.6 per cent from April’s 62.8 per cent. The participation rate is stuck at the lowest level since the late 1970s, partly due to retiring baby boomers.
Retailers hired 11,400 workers. Employment in the leisure and hospitality sector rose by 11,000. Professional and business services added 10,000 jobs, a marked slowdown from April. Construction companies cut 15,000 positions, the second consecutive month of decline, despite a surge in construction activity. Employment in the mining and logging sector, which suffers from the weak global economy as well as low oil and other commodity prices, fell by 11,000, extending a decline that stretches back to late 2014. Manufacturers slashed 10,000 positions. Government employment rose by 13,000.
A bright spot of May’s job growth report was worker pay. Average hourly earnings rose by 5 cents, or 0.2 per cent on the previous month to 25.59 dollars. Wages were up 2.5 per cent from the same month a year earlier.
May’s disappointing employment gains report and a referendum in Britain later this month on its EU membership are expected to prompt the US Federal Reserve’s decision-making committee to keep the target range for the federal funds rate unchanged – at 0.25 per cent to 0.5 per cent – at its next meeting on June 14-15. In December, Fed policymakers forecast four quarter-point rises in short-term interest rates over 2016. Only two rate increases by a quarter-point are now expected by the end of 2016.
photo: Washington State Dept of Transportation Follow / CC BY-NC-ND 2.0
