As expected, government employment surged last month as the Commerce Department hired 411,000 temporary workers to conduct the decennial census. Unfortunately, due to a sharp slowdown in private sector job growth, census-related employment accounted for 95 percent of the 431,000 total jobs added in May. After accelerating through the first four months of the year, private sector job growth slowed and only added 41,000 jobs last month.
The silver lining in today’s employment report is that manufacturing employment increased for a fifth consecutive month in May, a first in four years. The 29,000 gain accounted for 71 percent of private sector employment gains. Mirroring the prior three months, gains in fabricated metals and machinery accounted for the majority of the increase. This is likely being driven by several factors, including a recent upturn in construction-related activity as well as exports. Moving forward, support from the construction sector likely will moderate later in the summer as the positive effects from the recently-expired homebuyer tax credit begin to fade. However, the most recent reports on export activity signal that this important driver for the manufacturing sector continues to look positive.