Jobs are everything. Period. Good news is that things are looking up.
The U.S. added 223,000 net new jobs (preliminary) in May 2018, the best May gain since 2015. The unemployment rate dropped to 3.8 percent, a level last seen in April 2000 and matches a 50-year low. In the latest 12-months, the U.S. added an average 197,000 jobs per month, the most since a year ago.
Year-to-date, the U.S. has added 942,000 net new jobs compared to 992,000 a year ago. The slowed job creation rate is due to no-one-left-to-hire given the 3.8 percent unemployment rate. The Federal Reserve defines full employment when the unemployment rate is from 5.0 to 5.5 percent. There literally is no one left to hire.
The net job gain in the prior 12 months totaled 2.36 million. Total net job gains in the prior 12-months still significantly trails the 3.13 million level seen in February 2015, as shown in the following graph. Good news is that May 2018 essentially marks the fourth consecutive month increase in 12-month job growth rates.
The U.S. continues the trend of having more jobs than any time in history, as shown in the following graph. From the pre-recession peak in January 2008, total job loss was 8.7 million to the November 2011 trough. Since then, the U.S. has created 15.94 million net new jobs.
Job gains for 2018 are not a simple equation from the prior year, but vary month-to-month on a year-over-year basis. The next graph shows the net new job gains monthly since 2016. Three of the prior five months posted greater job growth compared to a year ago.
Employment in the Leisure and Hospitality sector is a good proxy of the overall health index of the U.S. economy. People do not spend money on vacations, cruises, entertainment, spas or dinners out unless they feel good about the future economy. My premise is that the U.S. economic outlook is healthy as long as the employment growth rate in Leisure and Hospitality exceeds that of the country overall. Current Leisure and Hospitality job growth in the prior 12 months was 1.64 percent versus 1.61 percent for the total economy. Given these data, again I see no recession on the horizon at this time foregoing unanticipated economic shocks. This is declining, however, signaling a potential start to eroding consumer confidence.
Average hourly earnings were up 8 cents in May versus April to $26.92. Hourly pay has risen 67 cents in the past 12-months, a gain of 2.7 percent. Hourly earnings monthly since 2012 are shown in the following graph.
Other items in the May 2018 jobs report:
- Number of Persons Unemployed for Less Than 5 Weeks declined by 81,000 from a month, now at 2.034 million versus 2.123 million a year ago – a 4.2 percent decline
- Long-Term Unemployed (jobless for 27 or more weeks), now at 1.293 million versus 1.665 million a year ago, is down 104,000 from April
- Civilian Labor Force Participation Rateis now 62.7 percent, identical to a year ago
- Unemployment The number of unemployed people dropped from 6.837 million in May 2017 to 6.065 million as of the end of May 2018
- Employment-Population Ratiois now 60.4 percent versus 60.0 percent a year ago – the bigger the better
- Number of Persons Employed Part Time for Economic Reasons(also known as involuntary part-time workers) are individuals desiring full-time employment but either had their hours cut back or cannot find a full-time job), declined by 37,000 from April and is down to 4.948 million compared to 5.268 million a year ago
- Marginally Attached to the Labor Force(not currently counted in the labor force, want and are available for work and had looked for a job in the prior 12 months) now at 1.455 million was at 1.475 million a year ago. Within that group, 378,000 were classified as Discouraged Workers – persons not currently looking for work because they believe there are no jobs available for them. Discouraged Workers rose by 23,000 in the past 12 months
- Construction added 25,000 new in May 2018, and has gained 286,000 in the prior 12-monts
- Professional and Technical Services gained 23,000 jobs in May and is up 206,000 in the past year
- Transportation and Warehousing added 19,000 jobs in May and is up 156,000 in the prior 12-months
- Manufacturing jobs increased by 18,000 in May versus April and are up 259,000 year-over-year
- Health Care gained 29,000 jobs in May 2018 and 392,000 in the past 12-months
- Mining(includes oil and gas exploration and production) added 6,000 jobs in the month
- Leisure and Hospitality jobs increased by 21,000 in April 2018 and are up by 262,000 in the past 12-months
To read the entire release from the Bureau of Labor Statistics click https://www.bls.gov/news.release/pdf/empsit.pdf
Many of the reasons that the job growth rate is in the mid-1.5 to 1.6 percent range is that anyone that has marketable skills either already has a job, lives in a locale without demand for their skill set, or really does not want to work.
Once again, this is a robust jobs report.