Written By: Maurice Ondoy Project Contributor at AngelouEconomics | Economic Impact of the US Jobs Report from BLS Data May 2018
The Bureau of Labor Statistics released US jobs data for May 2018 on June 1.
According to the Bureau of Labor Statistics, the United States economy created 223,000 non-farm jobs in May 2018. This outperformed economist predictions of 192,000 payroll additions. Retail, healthcare, professional and technical services, and construction were where the majority of the jobs were created. These four industries combined accounted for roughly 108,000, or 48.4%, of total jobs created during the month. Image Source: https://www.rigzone.com/news/us_jobs_report_slight_increase_in_oil_gas_jobs-08-dec-2017-152738-article/
The unemployment rate dropped down to 3.8% in May 2018 after remaining at 4.1% for the last five months. This is the lowest rate in 18 years. Among the major worker groups, the unemployment rate for adult women decreased to 3.3 percent in May 2018. The jobless rates for adult men also went down to 3.5%, teenagers went down to 12.8% from the previous 12.9%, Whites at 3.5% from the previous 3.6%, Blacks at 5.9% from the previous 6.6%, Asians to 2.1% from previous 2.8%. However, Hispanic unemployment increased to 4.9% from its previous 4.8% over the month of May 2018.
The drop in the unemployment rate looks pretty notable at first glance, but the details will tell you otherwise. The fall in the participation rate is why unemployment rate dropped down again by 0.1%. Therefore, a large number of people stopped looking for jobs altogether. Individuals drop out of the labor market for myriad reasons, however, the number one reason is that they are unable to find work.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in May while average weekly earnings increased by $2.76 from April’s $925.98 to $928.74 in May.
Therefore, while job additions and wage growth came in above expectations, the fall in the unemployment rate is really nothing to celebrate. The most worrying piece still remains the muted wage growth, which could have a wider impact.
The data on jobs in the US were mixed and here is the summary of the May 2018 Jobs Report:
- Unlike the bulk of the recovery thus far, the majority of the job creations in May 2018 were in high-paying sector which includes healthcare and professional and technical services.
- The jobs report was higher than that of what economists had hoped and expected for. The unemployment rate was at its lowest in the period of 18 years, since April 2002.
- The jobs generated did not increase average hourly earnings as much as expected, as the increase appears to be driven mostly by an increasing quantity of overtime hours, especially in the manufacturing sector.
- The labor force participation rate decreased by 0.1% to 62.7% in May 2018 from 62.8% in April 2018, which could be, to some extent, be a concern for forward economic growth.
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