According to the latest data from the Bureau of Labor Statistics, job growth in May was disappointing. The U.S. economy added just 138,000 net new workers in May, below the consensus estimate of 185,000 and even further from the 253,000 estimate provided by ADP yesterday. In addition, there were downward revisions to the March and April data, subtracting a total of 66,000 from those months in job gains. There were fewer Americans employed overall, down from 153.2 million in April to 152.9, a three-month low. As a result, the participation rate dropped from 62.9 percent to 62.7 percent, its lowest level since June 2016. With that in mind, we saw the unemployment rate fall once again, down from 4.4 percent to 4.3 percent, a 10-year low. Likewise, the so-called “real” unemployment rate declined from 8.6 percent to 8.4 percent, a level not seen since November 2007.
Meanwhile, manufacturers were hoping to have a sixth straight month of job gains, much as we saw in the ADP data. Instead, manufacturing employment was off by 1,000 workers in May. On the positive side, revisions to March and April data added another 3,000 employees to what was previously estimated. Overall, manufacturing employment has averaged 12,167 per month since December, which stands in sharp contrast to the loss of 16,000 workers on net seen in 2016 as a whole. As such, even with the slight decline in May employment for the sector, the general trend for manufacturing employment over the past six months has been favorable. We have seen higher expectations for job growth of late in light of a stronger outlook for demand and production.
Digging further into the May data, employment rose by 2,000 workers for durable goods industries, but there were 3,000 fewer workers for nondurable goods firms. The sector-by-sector breakdowns were mixed. The largest monthly job gains were in machinery (up 3,700), fabricated metal products (up 3,500), miscellaneous nondurable goods (up 3,300), primary metals (up 2,900) and transportation equipment (up 2,400), among others. At the same time, employment was off in other segments, including plastics and rubber products (down 3,800), nonmetallic mineral products (down 3,200), wood products (down 2,400), miscellaneous durable goods (down 2,000), printing and related support activities (down 2,000) and computer and electronic products (down 1,700). Overall, manufacturing employment was just shy of 12.4 million workers in May.
Average weekly earnings for manufacturing employees dipped from $1,082.21 in April to $1,077.33 in May. That represented a 1.8 percent year-over-year increase in average weekly earnings, up from $1,057.79 in May 2016. Average weekly hours for manufacturing workers were unchanged at 40.7 in May, but with average overtime hours in the sector edging up from 3.2 to 3.3 hours.
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