FileUnemployment

The Employment Situation – May 2019

Author : Andy Peterson

Updated : June 12th, 2019

The employment situation for the month of May has steadfastly maintained the growth achieved in the month of April. The unemployment rate has remained at 3.6 percent, which still remains to be the lowest rate in the last 50 years. The month of May will be the record 15th month to witness the rate of unemployment grow under 4 percent.

Establishment Survey Data

The professional and business services and healthcare companies have added more jobs than other sectors in May. The two sectors have added 33,000 jobs and 16,000 jobs respectively. However, there has been a substantial fall in job growth in these sectors when compared to the previous month. The professional and business services added 76,000 jobs and the healthcare sector added 27,000 in the month of April.

The reduction in job growth is not newly encountered in the month of May as this phenomenon has been observed since the month of March. The US just added an overall of 75,000 jobs in the month of May, which is significantly lesser than 224,000 jobs added in April. The average job growth has come down to 151,000 in the last three months (March, April, and May) against the average of 196,000 in the last 12 months.

This trend of reducing job growth, in spite of the unchanged unemployment rate, is worrisome due to the ongoing global trade disputes, particularly between the US and China. The heat is particularly felt by the construction and manufacturing companies. Employment in construction companies saw a small improvement of 4000, whereas the industry added over 30,000 new workers in April.

Manufacturing companies, along with mining, retail trade, retail trade, transportation, and warehousing companies witnessed a very small change in job growth in May. Along with the reducing job growth rates, another important indicator that is pointing towards the sensitivity of nature of the economy was the ISM Manufacturing Index.

The ISM Manufacturing Index is considered as one of the most important indicators of recent US economic activities. The Index showed that the economic activity in the month of May was at the lowest level in the last three years. This indicates another warning to the strength of the factory sector.

Household Survey Data

The status of the labor force has seen little to no change in the month of May, as compared to the month of April. The status of the major worker’s groups for May are as follows:

Workers GroupsUnemployment Rates
Adult Men3.3 percent
Adult Women3.2 percent
Teenagers12.7 percent
White population3.3 percent
Black Population6.2 percent
Hispanic population4.2 percent
Asian population2.5 percent

The month of May witnessed a marginal increase in the rate of persons unemployed less than 5 weeks and persons who are long-term unemployed. Persons unemployed less than 5 weeks increased by 243,000 to 2.1 million, whereas the long-term unemployed stood at 1.3 million.

The labor force participation rate and employment-population ratio both remained unchanged from the month of April, as both stood at 62.8 percent and 60.6 percent respectively.

Final Analysis

The trends displayed in the month of May may ring a bell of caution to the policy-making fraternity of the United States. The reducing job growth rate and the not-so-promising ISM Manufacturing Index results for this month indicates that there might be some challenges up ahead to contain the reduction of job growth rate.

Although the overall rate of unemployment stands at a record low as of May, there is a need to take steps to increase the rate of job growth to achieve sustainable growth.

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