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Another Miss: U.S. Economy Adds 559,000 Jobs in May, Unemployment Rate Drops to 5.8%

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http://www.breitbart.com/economy/2021/06/04/u-s-economy-adds-559000-jobs-in-may/

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The U.S. economy added 559,000  jobs in May and the unemployment rate dropped to 5.8 percent, the Labor Department said in its monthly labor assessment Friday.

The median forecast of analysts surveyed by Econoday was for 650,000 jobs and an unemployment rate of 5.9 percent. The Dow Jones consensus estimate was for 617,000.

The disappointing number follows April’s big miss. This adds evidence to the claim that hiring is being held back by enhanced unemployment benefits and schools that have not reopened full time, requiring some parents to stay home to take care of children. Many businesses say that they cannot hire enough workers to fill positions because of the government’s enhanced unemployment benefits program.

The economy has outperformed expectations on many metrics this year as vaccinations have boosted business and consumer confidence and restrictions on businesses have been lifted. The April and May employment numbers represent a rare misses.

April’s figure was revised up to 278,000 from 266,000, a smaller revision than many expected. March’s jobs number, initially reported at 916,000, has been revised down to 785,000.

In May, nonfarm payroll employment is down by 7.6 million, or 5.0 percent, from its pre-pandemic level in February 2020.

Average hourly earnings for all employees jumped by 15  cents to $30.33 in May, following an increase of 21 cents in April. Average hourly earnings of private-sector production and nonsupervisory employees rose by 14 cents to $25.60 in May, following an increase of 19 cents in April. The month after month increases suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages, the Labor Department said.

Leisure and hospitality added 292,000 jobs, including 186,000 jobs in restaurants and bars. Casinos, amusement parks, and recreation centers added 58,000. Hotels and motels added 35,000. April’s gain of 331,000 was revised down slightly to 328,000. Despite the gains, employment in the leisure and hospitality category is down by 2.5 million, or 15 percent, from its prepandemic level.

Construction lost 20,000 jobs in May and residential construction added just 4,000, a surprising result given the strength of the housing market. The prior month was originally reported as flat but was revised down to show a loss of 5,000 jobs, including a decline in residential construction.

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Some of the weakness in construction employment may be due to the softness of office and commercial construction, as suggested by the fact that nonresidential specialty trade contractor employment shrank by 16,8000. As well, heavy construction and civil engineering employment fell by 5,500. Public safety construction spending—which includes prisons, police stations, and border security—fell 15 percent in April.

Manufacturing added 23,000 jobs in May but April’s loss was revised down to show a loss of 32,000, worse than the 28,000 loss reported initially. Durable goods manufacturers added 18,000 jobs. Makes of cars, trucks, and auto parts added 24,800 jobs, partially recovering from last month’s chip shortage-driven contraction of 37,700 jobs.

Employment at food and beverage stores fell by 26,000, following a 46,800 job loss in April.

The private sector overall added 492,000 jobs, following April’s addition of 219,000 jobs. Governments added 67,000 jobs and April’s figure was revised up from 48,000 to 59,000.

The labor force participation rate slipped one-tenth of a percentage point to 61.6 percent in May. This has remained within a narrow range of 61.4 percent to 61.7 percent since June 2020, suggesting that the reopening has done little to draw workers back into the workforce and perhaps indicating that some former workers have decided to retire early or otherwise permanently exit the labor market. The participation rate is 1.7 percentage points lower than in February 2020. The employment-population ratio, at 58.0 percent, also did not budge in May but is up by 0.6 percentage point since December 2020. However, this measure is 3.1 percentage points below its February 2020 level.

The number of people employed “part time for economic reasons” was essentially unchanged at 5.3 million in May but is 873,000 higher than in February 2020. These are people who would have preferred full-time employment but say they are only working part time because their hours had been reduced or they were unable to find full-time jobs. Some economists regard this as the best measure of tightness or slackness in the labor market.

The number counted as not in the labor force but say they currently want a job was essentially unchanged over the month at 6.6 million but is up by 1.6 million since February 2020. These people are not counted as unemployed in the survey because they were not actively looking for work during the last 4 weeks or were unavailable to take a job. Many may still be collecting unemployment benefits because the requirement to search for work was suspending in many states due to the pandemic and is not closely monitored in most states.

 

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