U.S. economy adds only 75,000 jobs in May, two prior months revised downward

by Wesley Brown (wesbrocomm@gmail.com) 166 views 

Only new 75,000 positions were added to the U.S. economy in May as the labor market continues to tighten and several states push into job loss territory amid concerns that the Trump administration’s ongoing trade wars with China and Mexico is eroding payroll growth.

The U.S. Bureau of Labor Statistics also on Friday (June 7) revised the previous robust job growth totals in March and April to only 152,000 and 224,000, respectively. That downward revision from job additions of 189,000 and 263,000 in those months means there were 75,000 fewer jobs added to the economy than previously reported.

Nationally, the U.S. jobless rate remained at a 50-year low of 3.6%, but the monthly U.S. job count fell well short of Wall Street forecasts of 180,000 new jobs in May and  nearly 150,000 below last month’s revised totals, BLS data shows. Altogether, the job gains over the past the months has averaged only 151,000 per month, causing the Trump administration to highlight other areas of the job market.

“For 15 months in a row, the unemployment rate has been at or below 4.0% as May’s unemployment rate remained at 3.6%, the lowest rate since 1969,” said U.S. Labor Secretary Alexander Acosta. “Hispanic-Americans and Americans with disabilities maintained their series low unemployment rates at 4.2% and 6.3%, respectfully.”

Despite Acosta’s assessment of the nation’s job market, some economists are raising concerns about the sluggish labor data as the Trump administration digs in on imposing a 5% tariff on all Mexican goods imported to the U.S. next week. U.S. trade talks with China have also stalled as both countries look to mitigate against any potential impacts to the world’s two largest economies.

MANUFACTURING UNCERTAINTY
Following Friday’s release of the May employment data, National Association of Manufacturers’ Chief Economist Chad Moutray said U.S. manufacturers have experienced record growth over the past couple years, but certainty on a wide portfolio of issues, including infrastructure to trade, will be critical in 2019. For policymakers in Washington, he said, the May jobs reported should make that clear.

“Manufacturing employment has been more sluggish than desired for four straight months, coinciding with weaker demand and production activity and lagging behind the robust pace we experienced last year,” said Moutray. “For those numbers to pick back up, our leaders in Washington must recommit to tackling the issues currently creating uncertainty for businesses and focus on policies aimed at sustaining the vigorous growth the industry saw last year.”

The Labor Department’s May job numbers are comparable to the closely watched ADP National Employment Report released Wednesdaywhich shows that nonfarm private sector job growth fell to its lowest level in nearly a decade at 27,000 as small businesses, retailers and goods-producing sectors lost ground.

Like Moutray, University of Arkansas at Little Rock economist Michael Pakko said the May job data from ADP shows weakness in goods-producing sectors, including the construction and manufacturing sectors, that have seen strong growth in Arkansas in recent months. He said if is slow growth trend is also borne out in the U.S. unemployment report, there could be cause for concerns that the state market is moderating.

Among the 75,000 jobs added to the nation’s labor pool, employment gains continued to trend up in professional and business service and healthcare. Over the month, the number of unemployed persons was little changed at 5.9 million. Professional and business services added 33,000 jobs in May and has increased 498,000 over the year. The health care sector added another 16,000 in May, adding 191,000 jobs to the fast-growing industry over the past 12 months.

Construction employment rose by slightly by 4,000, following April’s strong spike of 30,000 new jobs. The blue-collar industry has added 215,000 jobs over the past 12 months, although growth has Employment showed little change in May in other major industries, including mining, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.

DEMOGRAPHIC DATA
Among the major worker groups, unemployment rates showed little or no change. Unemployment rates in May were 3.3% and 3.2% for adult men and women, respectively. Teenagers was the highest at 12.7%, following by Blacks (6.2%), Hispanics (4.2%), Whites (3.3%) and Asians (2.5%).

Among the unemployed, the number of job losers and persons who completed temporary jobs was little changed at 5.9 million. Those unemployed less than 5 weeks rose by 242,000 to 2.1 million. The number of long-term unemployed, those out of work 27 weeks or more, was little changed at 1.3 million, accounting for more than one-fifth of those not working at 22.4%.

The labor force participation rate held at 62.8% in May, unchanged from a year earlier. The employment-population ratio was also unchanged at 60.6% for the month and has been either 60.6% or 60.7% since October 2018.

The number of persons employed part time for economic reasons declined by nearly 300,000 to 4.4 million in May. These individuals, who would have preferred full-time employment, were working part-time because their hours had been reduced or they were unable to find a full-time job.

There were 1.4 million persons marginally attached to the labor force for the month, hardly changed from a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.

Among the marginally attached in May, there were 338,000 discouraged workers, or those persons not looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force had not searched for work for reasons such as school attendance or family responsibilities.

In May, average hourly earnings for all employees on private nonfarm payrolls rose by six cents to $27.83. Over the year, average hourly earnings have increased by 3.1%. The average workweek for all employees on private nonfarm payrolls remained at 34.4 hours in May. In manufacturing, the workweek and overtime were little changed at 40.6 hours and 3.4 hours, respectively.

The monthly revisions included a second change to March’s total nonfarm payroll data. BLS originally reported there were 196,000 new jobs added to the economy in the last month of the first quarter, but that total is now down to 153,000. Thus far in 2019, nonfarm employment has averaged 164,000 per month, compared to 223,000 per month in 2018.

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