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The Labor Department releases its May jobs report Friday and economists expect employers added to payrolls at a solid rate. Economists surveyed by The Wall Street Journal forecast the report will show nonfarm payrolls increased a seasonally adjusted 184,000 last month. They forecast the unemployment rate to stay steady at 4.4%.
#1: Solid Pace
U.S. employers added a robust 211,000 jobs to payrolls in April, helped by solid hiring in the health-care field. That’s a difficult pace to match, but don’t be alarmed if hiring slows a bit. Growth near the 12-month average of 186,000 jobs would be a sign of a strong labor market. Many economists expect hiring to ease somewhat as positions become more difficult to fill.
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#2: How Low Can It Go?
The unemployment rate fell to 4.4% in April, matching the lowest reading recorded since 2001. If May unemployment stays at or near that level, it would be further evidence the economy has reached full employment, meaning virtually everyone seeking work has found a job. If the rate dips lower, that could put upward pressure on wages and inflation.
#3: Fed Watch
The May jobs report is among the last pieces of critical data Federal Reserve officials will see before meeting later this month. They have strongly signaled that they’re prepared to raise the Fed’s benchmark interest rate. It would likely take a dismal report showing an extremely sharp hiring slowdown and big uptick in unemployment to throw them off course.
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#4: Where Are the Wage Gains?
Better wage gains have largely failed to materialize, with annual average hourly earnings rising at a 2.5% pace since late 2015, despite falling unemployment. Wage growth for nonsupervisors has slowed in recent months. Look to see if a tight labor market and a shift in hiring toward better-paying jobs help lift the overall wage measure.
#5: Participation Puzzle
The historically low unemployment rate comes with the caveat that the share of Americans participating in the labor force is near a four-decade low. The figure has stabilized over the past year. The labor-force participation rate was 62.9% last month. With an aging population increasingly retiring, holding participation steady is likely the best the economy can do in the near term.
June 02, 2017 at 01:47AM
from Eric Morath
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