Friday's US jobs report for May likely to show steady gains
- Author: Zachary Reyes Jun 04, 2017,
Jun 04, 2017, 13:11
The unemployment rate continued to fall and rising wage growth coupled with job gains indicate an economy on the rise, but the sluggish growth in the average hourly earnings (2.5 percent) is cause for concern. The industry has added an average of 22,000 jobs per month so far this year, compared to an average monthly gain of 32,000 in 2016.
The job sectors that saw the greatest gains in May were professional and business services (up 46,000), food services and drinking places (up 30,000) and health care (up 24,000).
The construction industry added 11,000, while energy firms hired 6,600 additional workers.
Governments shed 9,000 workers, with the losses concentrated at the state and local level.
"A lot of economists believe that once we eventually get a good one-half or 1 percent below full employment, wages will start to accelerate very quickly", Steve Rick, chief economist at CUNA Mutual Group, told CBS News ahead of the latest jobs report. It may also be a sign businesses are reluctant to expand their workforce until they see more evidence the new administration's plans are translating into legislation that'll reduce taxes and spur growth. "You'd expect with a low unemployment rate you'd have most of the working age population rushing out to go to work".
There were 48,000 new goods-producing jobs in May, including 37,000 in construction but only 8,000 in manufacturing, according to ADP. The main issue, he said, was that the company couldn't keep its managers, leaving the firm with too few leaders to interview, hire and train associates. But taken on its own, May's job growth wasn't bad: It represented the 80th straight month of gains, the longest such streak on record. Average hourly earnings rose 2.5% in May versus a year earlier, the same as in April and slower than the previous months of the year.
Mark Zandi, chief economist of Moody's Analytics, said: "Job growth is rip-roaring".
The report is strong enough to instill confidence and likely clear the way for the fed to raise interest rates later this month, the third hike since December. Over the last 12 months, this sector has added 267,000 jobs, so this month's figures actually beat the average over that period.
Among other data, the closely watched labor force participation rate declined by 0.2 percentage point to 62.7% in May.
The national unemployment rate nudged lower, to 4.3 percent from 4.4 percent - a level that was already the lowest in 10 years when it was announced last month. Economists say the main reason is that the proportion of adults who either have a job or are looking or one has remained unusually low. The labor-force participation rate fell to 62.7% in May from 62.9% in April.
Total manufacturing employment fell by 1,000 in the month.
Trump has yet to sign into law any policies that would change the trajectory of the job market or the economy from President Barack Obama's tenure. Those three sectors were relatively weak in April. Unemployment rates declined by 0.5 percent while the number of unemployed declined by 774,000.