■ 223,000 jobs were added last month. Wall Street economists had expected an increase of about 190,000, according to Bloomberg.
■ The unemployment rate was 3.8 percent, down from 3.9 percent in April and the lowest since early 2000.
■ Average earnings rose by 8 cents an hour and are up 2.7 percent over the past year.
The American economy roared into overdrive last month, delivering the strongest job gains since February. The report underscored other recent signs of strength, like robust personal income and spending data reported earlier this week. The unemployment rate for May was at lows not seen since the heady days of the dot-com bubble.
Policymakers at the Federal Reserve are almost certain to raise interest rates when they meet this month, and have said they expect at least one more increase later this year, most likely in September or December. The stately pace of the Fed’s campaign to tighten monetary policy has reassured Wall Street, which has been edgy lately over trade tensions and the prospect of a populist-style government in Italy.
Many of the gains in May were centered in the kind of deeply cyclical sectors that tend to perform best late in the economic cycle, like manufacturing, which added 18,000 jobs, and transportation, which registered a 19,000 gain. Less economically sensitive sectors also kicked in last month, with health-care employment rising by 29,000.
Most economists expect the momentum to continue, but the further drop in the unemployment rate and the healthy increase in average hourly earnings may stoke fears of inflation and, in turn, a more hawkish Fed.
For now, said Michael Gapen, chief United States economist at Barclays, the Fed’s plans shouldn’t worry stock-market bulls. “It was a stronger report than expected, but it wasn’t so hot as to lead the Fed to believe it’s behind the curve,” he said. “It will keep the Fed on its gradual normalization path.”
Wages, Wages, Wages
, Ms. Swonk said the great conundrum in the current economic environment was why wage growth had been so modest. After all, a tighter labor market should prompt employers to raise salaries to keep the workers they have and lure new ones, right?
In theory, yes, but in practice it hasn’t been working out that way — and everything from slow productivity growth to the decline of unions and digital disruption has been cited as a reason.
“This is the last shoe to drop in the labor market,” said Torsten Slok, chief international economist at Deutsche Bank. “It’s just a matter of time before wages start going up more strongly, but there’s frustration that it hasn’t happened yet, even though unemployment is the lowest it has been in almost 18 years.”
Besides the other potential causes, Mr. Slok has one of his own: While job switchers are being rewarded with raises, people who stay where they are not. Nearly 15 percent of what he calls “job stayers” saw no increase in wages in the past 12 months. At comparable periods in past economic cycles, that share was more like 10 percent.
“If you just stay around, you have less bargaining power,” Mr. Slok said.
https://www.nytimes.com/2018/06/01/business/economy/jobs-report.html
(more)
■ The unemployment rate was 3.8 percent, down from 3.9 percent in April and the lowest since early 2000.
■ Average earnings rose by 8 cents an hour and are up 2.7 percent over the past year.
The American economy roared into overdrive last month, delivering the strongest job gains since February. The report underscored other recent signs of strength, like robust personal income and spending data reported earlier this week. The unemployment rate for May was at lows not seen since the heady days of the dot-com bubble.
Policymakers at the Federal Reserve are almost certain to raise interest rates when they meet this month, and have said they expect at least one more increase later this year, most likely in September or December. The stately pace of the Fed’s campaign to tighten monetary policy has reassured Wall Street, which has been edgy lately over trade tensions and the prospect of a populist-style government in Italy.
Many of the gains in May were centered in the kind of deeply cyclical sectors that tend to perform best late in the economic cycle, like manufacturing, which added 18,000 jobs, and transportation, which registered a 19,000 gain. Less economically sensitive sectors also kicked in last month, with health-care employment rising by 29,000.
Most economists expect the momentum to continue, but the further drop in the unemployment rate and the healthy increase in average hourly earnings may stoke fears of inflation and, in turn, a more hawkish Fed.
For now, said Michael Gapen, chief United States economist at Barclays, the Fed’s plans shouldn’t worry stock-market bulls. “It was a stronger report than expected, but it wasn’t so hot as to lead the Fed to believe it’s behind the curve,” he said. “It will keep the Fed on its gradual normalization path.”
Wages, Wages, Wages
, Ms. Swonk said the great conundrum in the current economic environment was why wage growth had been so modest. After all, a tighter labor market should prompt employers to raise salaries to keep the workers they have and lure new ones, right?
In theory, yes, but in practice it hasn’t been working out that way — and everything from slow productivity growth to the decline of unions and digital disruption has been cited as a reason.
“This is the last shoe to drop in the labor market,” said Torsten Slok, chief international economist at Deutsche Bank. “It’s just a matter of time before wages start going up more strongly, but there’s frustration that it hasn’t happened yet, even though unemployment is the lowest it has been in almost 18 years.”
Besides the other potential causes, Mr. Slok has one of his own: While job switchers are being rewarded with raises, people who stay where they are not. Nearly 15 percent of what he calls “job stayers” saw no increase in wages in the past 12 months. At comparable periods in past economic cycles, that share was more like 10 percent.
“If you just stay around, you have less bargaining power,” Mr. Slok said.
https://www.nytimes.com/2018/06/01/business/economy/jobs-report.html
(more)
