May 2018 Employment Situation

America’s economy keeps churning out jobs.  According to the Bureau of Labor Statistics, firms added 223,000 net new jobs in May 2018, following April’s downwardly revised count of 159,000 (originally 164,000).  Additionally, the unemployment rate fell one-tenth of a percentage point to just 3.8 percent, matching the lowest level since 1969. 

Other details captured in the survey resonated with the headline’s sentiment.  Average hourly earnings rose 0.3 percent, accelerating from 0.1 percent in April.  Year-over-year, it increased 2.7 percent from 2.6 percent a month earlier.  The average workweek for all employees held steady at 34.5 hours, so even if no additional jobs were added, Americans’ aggregate income would have increased in the period because of the uptick in earnings.  Unfortunately, there was a fly in the ointment.

The participation rate declined as just 62.7 percent of Americans consider themselves part of the labor force.  Those actively looking for work fell 281,000 to 6.065 million.  Despite this blemish, many were excited by release’s mostly positive tone.

Few economic indicators get released with the type of fanfare received by the jobs report. Business news channels line up their best guests to weigh-in on the figures. Even President Trump couldn’t wait to talk tweet about it on Friday.  He got an early look at the figures (which is normal for the nation’s leader) and seemed pleased with this indicator’s progress, sending his followers a prerelease hint.  While his trade policies are questioned by many, it is difficult to find fault in his general enthusiasm for this iteration of the employment situation.