Payrolls in U.S. Rise More Than Forecast as Wages Boosted

[donsutherland1]

From Bloomberg.com:

Payrolls climbed in May by the most in five months and worker pay accelerated, showing companies were upbeat about the U.S. economy’s prospects after an early-year slump.

The 280,000 advance in payrolls exceeded the median forecast in a Bloomberg survey and followed a revised 221,000 April increase, figures from the Labor Department showed Friday in Washington. The median forecast called for a 226,000 May gain. The unemployment rate crept up to 5.5 percent as more people entered the labor force, while hourly earnings rose from a year ago by the most since August 2013.

Payrolls in U.S. Rise More Than Forecast as Wages Boosted - Bloomberg Business

In a continuing theme, skilled positions (professional and business services and health care) accounted for more than 40% of May’s employment increase. Over the last three months, skilled positions have accounted for 46% of the employment increase. Such jobs currently account for 24.5% of nonfarm employment. Further highlighting the labor market's growing emphasis on skills, the unemployment rate for those with only a high school education moved somewhat higher for the second consecutive month and up to 5.8% vs. 5.4% for April. That figure is now slightly above the national average. In contrast, the unemployment rate for those with a Bachelor's Degree or higher held steady at 2.7% while the unemployment rate for those with an Associate's Degree or some college fell for the second consecutive month to 4.4%.

The full employment situation report can be found at: http://www.bls.gov/news.release/archives/empsit_06052015.pdf


In general, this fairly robust report strengthened the argument for a rebound in economic activity from Q1. Were the economy facing a more protracted slowdown, the employment report would very likely have been weaker. All said, this data is consistent with the recently-released Federal Reserve Beige Book report. The economy is continuing to expand.

 

[MrT]

Where does the report note (or can anyone just tell me the results of the report) the numbers for hourly wage growth?

 

[donsutherland1]

Where does the report note (or can anyone just tell me the results of the report) the numbers for hourly wage growth?

Table B-3 (p.32 of the .pdf). There are also some other earnings tables in the Establishment Data section that begins on page 28 of the .pdf. Average weekly earnings increased 0.3%.

 

[MrT]

Thanks.

So a growth from 24.40 to 24.96 (or 2.3%) year-to-year. That is decent and one can hope that the rate will continue to accelerate.

 

[donsutherland1]

Some additional data (private sector):

Education & Health Services and Professional and Business Services accounted for 49% of the employment increase in May. Both areas saw faster wage growth than the nation as a whole. Education and Health Services saw wages increase 0.4% (27% faster than the national average) and Professional and Business Services saw wages increase 0.8% (+136% of the national average). In short, not only did skilled professions account for a disproportionate share of employment growth, they also experienced faster wage growth than the national average.

On a year-to-year basis, those two categories accounted for 43% of the private sector employment increase. Education and Health Services wages increased 2.5% and Professional and Business Services wages rose 2.4%. Average weekly wages rose 2.3% in the private sector.

 

[donsutherland1]

Thanks.

So a growth from 24.40 to 24.96 (or 2.3%) year-to-year. That is decent and one can hope that the rate will continue to accelerate.

That's a pretty good number when contrasted with the major price indices. However, there can be substantial variation from occupation to occupation, company to company, and industry to industry.

Overall, the wage and employment data have likely increased the probability that the Federal Reserve will lift interest rates in September or December if the current trends are sustained. Following its Article IV consultation with the U.S., the IMF advised that the Fed avoid rate hikes until next year. barring upside surprises to economic growth and inflation. The year-to-year wage increase is reasonably close to the Fed's price stability goal, but the large increase in employment was above expectations. The rebound in GDP growth during Q2 will be important. If its at or above 3%, the Fed may favor the earlier date. If not, it might wait until the Q3 data is available and hold off until December. It's October meeting would occur prior to the release of the advance Q3 data.

 

[donsutherland1]

For what it is worth, Mohammed El-Erian tweeted the following response what was a strong employment report:

A good #employment report:Solid #jobs gains (280,000),net upward revisions and better wage gains. Will boost #dollar and push #yields higher

El-Erian is Chief Economic Adviser, Allianz. He is also Chair of President Obama's Global Development Council., author of the NYT/WSJ bestseller When Markets Collide, former CEO/CIO of PIMCO. He also served 15 years with the International Monetary Fund.

 

[Helix]

looks like it's a debunking month, as opposed to a "see, i told you the economy was awful" month. i guess the president remembered to turn on the Magical Presidential Job Creation Machine[sup]TM[/sup] in May.

 

[DA60]

Yup, it's a good jobs report theoretically...great in some areas...but there are some worrying trends that continue on.

As I have long said, the 35-44 and especially the 45-54 age ranges are, IMO, the key to a healthy economy. These are the people that are supporting the most dependents (children) and buying the most big ticket items.
And once again, despite the large number of employment increases, the 45-54 went down again (buy 49,000) and the 35-44 barely went up (by 23,000) for a net loss of 26,000. In fact the entire 25-54 age range only went up by 25,000.
IMO, you simply cannot have sustained economic growth with these two age groups lagging behind.

http://www.bls.gov/news.release/empsit.t09.htm

Most of the employment gains (209K) came in the 20-24 age range...hardly the age group that supports families or makes the most money. And how many 20-24's buy houses or other big ticket items...not many.

Btw, a rather odd statistic is that less men (2,000) were employed in May then April.

 

[DA60]

I would also like to point out that since the beginning of the Great Recession, there are still almost 4 million(!?!) less Americans employed in the 25-54 age range.
With over 2.4 million less employed in the all important 45-54 age range AND almost 3 million less in the (IMO) almost as important 35-44 age range.

http://www.bls.gov/news.release/archives/empsit_01042008.pdf

Table A-9. Selected employment indicators


How can you have a recovery when even after 6 1/2 years of massive government/Fed stimulus (plus ZIRP) there are still millions less people working in the most important sectors of the economy?

Almost all of the new employment has gone to over 55's and 20-24's...and these are clearly not the best paying jobs or the people that support the most dependents.

The middle class are being left behind. The rich are getting FAR richer with the Fed indirectly pumping up the equity markets and the poor are getting more numerous (just look at food stamp usage...still WAY up since Dec. 2007).
But the middle class have less jobs and are clearly shrinking in number.

This 'recovery' is the Mercedes/Walmart recovery.

It is not healthy and it is not sustainable, IMO.

 

[Chomsky]

I'm (cautiously) impressed with the wage increases.

The 'missing piece' of the economy I've been waiting for ....