- The US unemployment rate dropped to an 18-year low of 3.8% in May and employers hired more people than economists had forecast, according to the jobs report released Friday.
- Wages also grew faster than expected – a sign the tighter labour market is prompting employers to pay workers more.
- May marked the 92nd straight month of job growth in the US, a record streak.
US employers added 223,000 nonfarm payrolls in May, more than expected, while the unemployment rate fell to an 18-year low of 3.8%, according to the jobs report released Friday.
Economists had forecast that employers added 190,000 jobs on net with the unemployment rate remaining at 3.9%.
May marked a record 92nd straight month of job growth in the US. Most of the hiring last month came from the healthcare, construction, and retail industries.
Job openings are at a two-decade high, according to the most recent data from the Bureau of Labour Statistics, and that’s good news for the droves of young people who recently graduated.
Anecdotally, companies continue to lament about how difficult it is to fill positions for highly skilled workers and how they’re having to pay up to retain talent.
Wage growth, which has been depressed during most of this economic recovery, increased by more than expected last month. This signals that the tighter labour market is prompting employers to pay workers more. Average hourly earnings rose 0.3% month-on-month (0.2% forecast) and 2.7% year-on-year (2.6% expected).
“It supports the idea that fiscal stimulus is having an impact and it can be effective,” said Josh Wright, the chief economist at recruiting-software firm iCIMS. “Whether or not it’s the right move now is something that we’ll continue to debate now and in the future, but it certainly looks like it’s feeding through,” he told Business Insider.
But there are still many working-age people on the sidelines of the job market. The labour-force participation rate inched down to 62.7% from 62.8% in April. Though more people joined the workforce in the first quarter of 2018 than in the first quarter of 2017, the share of prime-age workers who are employed still hasn’t returned to prerecession levels.
People who give up on unsuccessful job searches are captured in the so-called U-6 unemployment rate, which also includes people who work part time but would rather be full time and which is higher than the headline rate. The good news for job seekers, however, is that the gap between these two rates has been shrinking.
“Looking forward to seeing the employment numbers at 8:30 this morning,” President Donald Trump tweeted on Friday. The president and other senior members of his administration are privy to the report the day before it’s released.
The black unemployment rate, whose decline Trump has celebrated, fell to a new low of 5.9%.
Last month’s strong employment situation makes it even more likely that the Federal Reserve will raise its benchmark interest rate again when it meets in two weeks.