Employment Situation: Steady, Solid Gains

Bottom Line: Overall this was another solid jobs report but did little to change the trend rate of job creation or wage growth. Job creation rebounded sharply in May with gains across sectors. After contracting in April, wholesale trade and transportation jobs were above average, while retail trade also saw stronger than average gains. Average hourly earnings rose a touch more than expected, rebounded from a slower pace in April. On a trend basis hourly and weekly earnings are growing at a pace just slightly above that of 2016 (about 2.7% annualized vs. 2.6% in 2017). The unemployment rate fell just slightly, hitting a low for this cycle, as labor force participation slipped. Payroll Employment rose by 223k in May, compared with market expectations for an increase of 190k. The prior 2 months were revised, lower in April by 5k and higher in March by 20k. Government jobs ROSE by 5k. Consequently, private sector jobs ROSE by 218k. Private education jobs rose by 7k. State and Local education jobs rose by 1k. Overall employment is now 1.6% ABOVE its year ago level, Over the past 12 months, 2,363k jobs have been created. In May, the job gains were in

• Trade, Transportation & Utilities (+22k with 31k of those in Retail Trade),
• Professional & Business Services (+31k with a slip of 7.8k in Temp Help Services),
• Education & Health Services (+32k),
• Construction (+25k),
• Leisure & Hospitality (+21k),
• Manufacturing (+18k),
• Other Services (+13k), and
• Financial Activities (+8k).

The Unemployment Rate FELL by 0.1 percentage points in May to 3.8%, compared with market expectations for a no change to 3.9%. Household employment rose by 293k while the labor force increased by 12k, resulting in a decrease in the number of unemployed of 281k. The Labor Force Participation Rate FELL by 0.1 percentage points to 62.7%. The Employment-Population Ratio ROSE by 0.1 percentage points to 60.4%. The number of people Working Part-Time for Economic Reasons FELL by 26k to 4,872k. while Long-Term Unemployment FELL by 104k to 1,189k (accounting for 19.6% of the unemployed), while the Mean Duration of Unemployment FELL by 1.8 weeks to 21.3 weeks. There are now 6.1 million people officially unemployed. In addition, there are another 5,183k people who say they want a job but are not currently looking for one. Finally, another 4,872k people are working part-time because of slack economic conditions. Hourly Earnings ROSE by 0.3% in May, above market expectations of 0.2%. Hourly earnings are now 2.7% ABOVE their year ago level. Weekly Earnings also ROSE by 0.3%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 3.0% ABOVE their year ago level. The Average Workweek was UNCHANGED by 0.0 to 34.5 hours, in line the market consensus at 34.5 hours.