Dissecting the May Jobs Report
The Labor Department released its May jobs report with the lowest unemployment rate in 16 years but lower than expected job growth. Here’s what we know:
138,000: The economy added 138,000 jobs in May
4.3%: The unemployment rate fell to 4.3%
2.5%: Wages went up 2.5% over the last year
The unemployment rate is the highlight of the May report. The Wall Street Journal reports that this is the lowest level since 2001. Broader measures of unemployment and underemployment are also down, and it’s also down from the April jobs report.
The New York Times reports the numbers show we’re nearing full employment, but depending on who you are, that may or may not be a good thing.
Despite the banner unemployment headline, economists say this report sends some mixed signals about the economy. First, the Wall Street Journal reports the 138,000 jobs added was actually lower than economists expected, and Bloomberg reports the past three months show the slowest job growth since 2012.
Additionally, part of the reason for the decreasing unemployment rate is a shrinking labor force. The New York Times points out that the labor-force participation rate dropped this month to 62.7%, which indicates that workers sidelined during the recession are not rejoining the labor force despite years of job growth and a low unemployment rate.
The 2.5% wage gain has been steady since late 2015, according to the Wall Street Journal. Economists had predicted that would eventually start to increase with the falling unemployment rate, but so far, that hasn’t happened.
Economists are debating what exactly these mixed signals mean when looked at as a whole picture. Marketwatch reports that the low unemployment rate will be enough for the Federal Reserve Bank to increase interest rates. However, they also show the report caused the dollar to weaken and the stock market gains were limited.
Read our analysis of the June jobs report here.