The May 2017 jobs report, released by the Bureau of Labor Statistics in early June, showed lower numbers for non-farm jobs and slightly lower unemployment, despite a slowdown in hiring, in what has historically been a lackluster month.
Job Growth Slower Than Anticipated
Previous to the release of the report, analysts had predicted non-farm job-growth to be 185,000 new jobs. But the actual number proved to be lower, with the reported payroll growth closer to 138,000 new positions.
This continued the downward trend from the past few months. March’s 50,000 job growth was shy of the 79,000 predicted. April was also lower, at 174,000 as opposed to the 211,000 predicted. The placed the average job growth for those months at 121,000.
Despite the slowdown in job creation, unemployment fell one tenth of a point to 4.3%, the lowest rate since 2001. While this may seem like a positive indicator, some analysts believe this is the final drop in a job market that is at full employment. Officials believe the unemployment rate will level off at 4.7 to 5.0%. The number of unemployed people was roughly 6.9 million.
Further, the number of people holding or looking for a job fell to 62.7%, two-tenths of a percent lower than last month. With 429,000 fewer Americans in the workforce, workers in their prime are not returning to work even though market conditions are improving.
Wage Growth Also Disappoints
Average hourly earnings improved 2.5% annualized with the average work week remaining steady at 34.4 hours. While consistent, the growth in salary is not significant enough to be noteworthy.
It’s important to note that there are a number of seasonal factors that make May a unique month. In recent years, hiring has slowed down in the spring, and 2017 is not an exception to this trend.
With a low unemployment rate, there are fewer qualified workers to fill jobs. Additionally, 2017 college graduates have not yet entered the workforce. These factors may be combining to heavily contribute to May’s mildly discouraging labor performance.