US job creation remains at high level with broad-based employment gains
Data released today by the US Bureau of Labor Statistics show that the US economy created 217,000 jobs over May, down substantially from April’s outturn of 282,000. As April’s figure is likely to have included pent-up labour demand after the extremely cold weather hit output and hiring over the first quarter, today’s data is a better indicator of the fundamental health of the economy. The unemployment rate remained unchanged at 6.3%.
The largest gain, of 55,000, came for professional and business services, while employment in food services and drinking places rose by 32,000. Manufacturing industries were shown to be in good health too: employment in manufacturing was stable this month, but has shown a 105,000 increase over the past year; the number of jobs in the durable goods sub-sector did however grow by 17,000. Along with twelve consecutive months of expansion on the manufacturing purchasing managers’ index, this shows encouragingly broad-based recent growth.
At 214,000, average monthly job creation so far this year is up on 2013’s figure of 186,000 new jobs per month. Job creation showed a distinct slowdown over December and January, but appears to have rebounded now. This provides a more optimistic assessment of recent economic performance than the US GDP data released last week by the Bureau of Economic Analysis showing that the economy contracted at an annualised rate of 1.0% over the first quarter: continued high levels of employment gains provide more evidence that it was indeed weather related.
Overall, prospects for second-quarter growth are now looking strong. The latest data justifies the Federal Reserve’s Open Market Committee in sticking to its planned timetable for tapering asset purchases over the course of 2014 before raising the federal funds rates in 2015.