May Jobs Growth Numbers Steady but Slight
The Labor Department released May’s job report this morning and the news is just so-so. Only 138,000 jobs were added last month, not nearly the 180,000-plus some economists were predicting. The U-3 headline unemployment rate dropped slightly from 4.4% to 4.3%, which is the lowest it has been since 2001. And in what may be even better news, the U-6 unemployment rate dropped from 8.6% to 8.4%, continuing its steady decline. After hovering near 10% for over a year, that better measure of unemployment has dropped more than a percentage point since the election.
On Thursday, payroll agency ADP reported 253,000 new private-sector jobs from the previous month, with Mark Zandi, the chief economist of Moody’s Analytics, declaring, “Job growth is rip-roaring. The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force. Increasingly, businesses' number one challenge will be a shortage of labor.” Things didn’t pan out quite as well as the always-overoptimistic ADP showed, but that’s not the only story.
Economists are beginning to question whether the economy has reached “full employment” levels — the best indicator being a steady increase in wages as businesses compete over a shrinking number of available workers. That has yet to materialize, but several economists are predicting that this will be seen in the next few months. The good news is that much of the new job growth can be credited to Donald Trump’s active deregulations, as businesses respond to what they perceive as a much more growth-oriented policy and administration. However, it is quite evident that ObamaCare is still proving to be a tremendous drag on the economy. Republicans' slow movement on both repealing and replacing ObamaCare and on enacting tax reform legislation is likely keeping jobs numbers a little on the low side. Success in either or both will jolt the economy out of the Obama doldrums.