Friday, June 02, 2017

Job Growth Slows Sharply in May as employment falls

Job Growth Slows Sharply in May as Unemployment Hits New Low
June 2, 2017
By Dean Baker

The unemployment rate fell to 4.3 percent in May, a new low for the recovery and the lowest level since 2001. However, this decline in the unemployment rate was the result of people leaving the labor market, as the number of people reported as employed in the household survey actually fell, with the overall employment-to-population ratio (EPOP) dropping from 60.2 percent in April to 60.0 percent in May.

The establishment survey showed further evidence of a weakening labor market as the pace of job growth slowed in May to 138,000. There were also substantial downward revisions to the prior two months’ job growth numbers, which brought the average for the last three months to just 121,000.

The big job gainers were restaurants (30,300) and health care (24,300), together the two sectors accounted for 40 percent of job growth in May. While the job growth in restaurants is somewhat above the 22,000 average for the last year, it appears that the pace of employment growth in health care is slowing. It averaged 30,000 a month in 2016, compared with just 21,000 so far in 2017.


In addition to the weak job growth, wage growth appears to be moderating rather than accelerating. The year-over-year increase in the average hourly wage is just 2.5 percent. Taking the average of the last three months compared with the average of the prior three months, wages are rising at just a 2.2 percent annual rate.

The situation in the household survey was mixed. The drop in employment was among prime-age workers, with the EPOP falling from 78.6 percent to 78.4 percent, with both men and women seeing small declines. On the plus side, the unemployment rate for African American men over 20 fell 0.8 percentage points to 6.5 percent, the lowest level since April of 2000. However this was entirely due to men dropping out of the labor force as employment actually fell.


No comments:

Post a Comment