June 07, 2019
After adding 224,000 jobs in April, payroll job growth slowed to 75,000 in May and the unemployment rate remained at 3.6%—its lowest level since 1969—while average hourly earnings increased 3.1% from one year ago.
Trade and tariff uncertainty appears to be taking a toll. Flooding in the Midwest also may have played a role in the slowdown. However, a one-month hiring pause is not unusual and typically occurs once or twice a year after ten years of economic recovery.
The labor market remains fairly tight as the broadest measure of underemployment fell to its lowest level (7.1%) since the dot.com bubble in 2000.
The slowdown does not indicate a recession is in the future as job gains have averaged 151,000 per month over the past three months and May and June job numbers are historically subject to questionable seasonal adjustment by the BLS (unadjusted payroll job growth in May was 687,000).
Job gains were very focused, with four industries accounting for over 90% of the May increase:
Most other industries were little changed except for retail trade (-7,600) and state and local governments (-19,000).
Real (inflation adjusted) hourly earnings growth also remains fairly steady at 1.2% over the past year as inflation remains in check despite the trade war with China. This will support future consumer spending and economic growth.
Looking ahead: Employers will continue to have trouble filling key positions. According to the latest ManpowerGroup report, 46% of U.S. employers report difficulty filling jobs, with skilled trade workers, sales representatives, and drivers the hardest roles to fill.