Employment Situation: Weak Payroll Growth

Bottom Line: Payroll Employment rose by 138k in May, compared with market expectations for an increase of 182k. The retail trade sector continued to shed jobs in May and prior months were revised to show larger losses in the sector. Overall, the prior 2 months were revised lower in April by 37k and lower in March by 29k. The trend is towards slower job growth. In the last 3 months just 121k jobs have been created on average -- this compares to 161k average over the last six month, 189k over the last twelve months, 187k in 2016 and 226k in 2015. The Unemployment Rate FELL by 0.1 percentage points in May to 4.3%, compared with market expectations for a no change to 4.4%. This was its lowest level, since July, 2008. Household employment fell by 233k while the labor force declined by 429k, resulting in a decrease in the number of unemployed of 195k. The Labor Force Participation Rate FELL by 0.2 percentage points to 62.7%. The Employment-Population Ratio FELL by 0.2 percentage points to 60.0%. Hourly Earnings ROSE by 0.2% in May, in-line with market expectations of 0.2%. Hourly earnings are now 1.7% ABOVE their year ago level. Weekly Earnings also ROSE by 0.2%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 2.5% ABOVE their year ago level. The Average Workweek was UNCHANGED at 34.4 hours, in line the market consensus at 34.4 hours. Payroll Employment rose by 138k in May, compared with market expectations for an increase of 182k. The prior 2 months were revised, lower in April by 37k and lower in March by 29k. Government jobs FELL by 9k. Consequently, private sector jobs ROSE by 147k. Private education jobs rose by 15k. State and Local education jobs fell by -7k. Overall employment is now 1.6% ABOVE its year ago level, Over the past 12 months, 2,266k jobs have been created. In May, the job gains were in:

• Trade, Transportation & Utilities (+0.1k with -6k of in Retail Trade),
• Professional & Business Services (+38k with the addition of 13k in Temp Help Services),
• Education & Health Services (+32k),
• Leisure & Hospitality (+31k), Other Services (+12k),
• Construction (+11k), and Manufacturing (-1k).

Jobs were shed in Information (-2k), and Government (-9k). The Unemployment Rate FELL by 0.1 percentage points in May to 4.3%, compared with market expectations for a no change to 4.4%. Household employment fell by 233k while the labor force declined by 429k, resulting in a decrease in the number of unemployed of 195k. The Labor Force Participation Rate FELL by 0.2 percentage points to 62.7%. The Employment-Population Ratio FELL by 0.2 percentage points to 60.0%. The number of people Working Part-Time for Economic Reasons FELL by 43k to 5,154k. while Long-Term Unemployment ROSE by 37k to 1,663k (accounting for 24.2% of the unemployed), while the Mean Duration of Unemployment ROSE by 0.6 weeks to 24.7 weeks. There are now 6.9 million people officially unemployed. In addition, there are another 5,561k people who say they want a job but are not currently looking for one. Finally, another 5,154k people are working part-time because of slack economic conditions. The Index of Aggregate Hours ROSE by 0.1%, combining the modest gain in private payroll employment and the steady workweek. Hourly Earnings ROSE by 0.2% in May, below market expectations of 0.2%. Hourly earnings are now 1.7% ABOVE their year ago level. Weekly Earnings also ROSE by 0.2%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 2.5% ABOVE their year ago level. The Average Workweek was UNCHANGED at 34.4 hours, in line the market consensus at 34.4 hours.