Economy Shows Strength Adding 217K New Jobs In May

Jun 6, 2014

Econ index May 2014For the fourth consecutive month, the U.S. economy added more than 200,000 jobs in May. The Labor Department reported this morning that 217,000 new jobs were added during the month. The unemployment rate held steady at 6.3%.

Analysts were predicting a gain of about 215,000 new jobs. Most sectors showed gain. Government was one of the weakest, adding 1,000 new jobs all at the local level. State and federal government cut jobs.

Temp employment rose a modest 14,300, the smallest gain since January’s weather-depressed increase of 7,600. Since the beginning of the year, temp job growth has averaged 17,100 monthly. In 2013, the average monthly increase was 19,000. Comparing Jan-May, 2013 averaged 17,800.

Overall, employment by staffing and search firms, PEOs and employment agencies and registries grew by 20,200 jobs in May.

The strength of the May report helped bolster the financial markets, with the Standard & Poor’s index gaining five points to 1,945 in the minutes after the markets opened.

Bart van Ark, executive vice president and chief economist for the non-profit business group The Conference Board, said the numbers show a trend that is “encouraging, with more good news expected through the summer and into the autumn months.”

The Conference Board’s Consumer Confidence Index rose in May to 83, after falling off a post-recession high in March of 83.9. Other Conference Board indicators — the Employment Trends Index, its Leading Economic Index as well as the measure of CEO confidence — have also risen in the last two months.

With May’s payroll additions, employment now stands at 138.46 million, just above the peak in January 2008. However, the participation rate — the percentage of working and unemployed people in the labor force — was unchanged in May at 62.8%. It’s the lowest rate in more than 30 years.

All but 1,000 of the new jobs were created by the private sector. Goods producers — those involved in manufacturing (+10,000), mining (+2,100), and construction (+6,000) — added a net 18,000 new jobs. The manufacturing workweek increased by 0.2 hour in May to 41.1 hours, an indication of increasing orders for goods.

The service sector added 198,000 jobs. Gains in other sectors:

  • Healthcare +33,600;
  • Restaurants and bars, +31,700;
  • Transportation and warehousing, +16,400;
  • Retail trade, +12,500, with automotive (+6,800) and general merchandise (+5,300) leading the way.

State and federal government shed a combined 10,000, while local governments added 11,000.

A Bloomberg survey of nearly 100 economists early in May found that the average of their monthly  job growth predictions was 225,000. That’s not too far off the actual 214,000 so far this year. Last year, the average was 194,000.

Even at 225,000 monthly new jobs, unemployment will only slowly come down. The Labor Department report said there were 9.8 million unemployed people in May; 3.4 million were out of work for more than half a year, a number that has been edging down slowly.

Using the so-called U-6 unemployment numbers — which include individuals working part-time because they can’t find other work, and other individuals out of work, but not officially counted as unemployed — the nation’s labor underutilization rate in May was 12.2% seasonally adjusted.

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