Hiring Picks Up, Unemployment Rate Drops to 18-Year Low

June 01, 2018

Employers added 164,000 payroll jobs in April and the unemployment rate dropped to 3.8 percent, a level not seen since the height of the dot-com bubble in 2000 and the Vietnam War in 1969.

Historic unemployment rates for many groups.  Black, Hispanic, and Asian unemployment rates hit or remain near record lows (5.9%, 4.9%, and 2.1% respectively), and the unemployment rate for women dropped to a 65-year low (3.6%).

Pace of hiring is regaining strength after a lull in March and April.  Over the past six months, employers have added an average 202,000 jobs per month, up from 192,000 per month in the previous six-month period.

Job openings and quit rates are at or near record highs.  Businesses are unable to fill a record number of open positions and employees are quitting at rates not seen since the dot-com bubble in search of higher wages.  Finding workers is increasingly becoming businesses' number one problem as the unemployment rate drops and the percentage of the population who is not in the labor force, but say they want a job, is near record lows.

Bonus and benefit increases before significant wage gains?  Average weekly earnings increased a modest 2.7 percent over the past year as one-time bonuses and awards now account for 12.7 percent of payroll, up from 5.9 percent in 1993.

Job gains were widespread, with several industries having sizable gains, including:

  • Retail trade (+31,100);
  • Health care (+28,900);
  • Construction (+25,000); and
  • Professional and technical services (+22,600).

Strong job market is boosting U.S. consumer confidence.  Views on the current state of the economy are the best in 17 years and bigger after-tax paychecks are supporting gains in consumer spending.  However, higher gasoline prices and mortgage rates may create a headwind.