May Employment Report Shows Job Creation is Gaining Momentum

Early indications of an anemic May employment report proved unduly pessimistic this morning when the U.S. Labor Department announced 217,000 new jobs were added during the month and that the unemployment rate was unchanged at 6.3 percent.

Analysts predicting a gain of 210,000-215,000 payroll additions in May were surprised Wednesday when payroll processor ADP’s monthly jobs report estimated a mere 179,000 new jobs. Now, with the government showing a fourth consecutive month of gains over 200,000, there’s greater confidence that job creation is finally gaining momentum.

Econ-index-May-2014 (1)

“It’s in line with where we ultimately think the pace of job growth will be this year,” Michelle Girard, chief U.S. economist at RBS Securities Inc., told Bloomberg News.The figure is “consistent with an economy that is growing between 2 percent and 2.5 percent.”

Bart van Ark, executive vice president and chief economist for the non-profit business group The Conference Board, said the numbers show a trend that is “encouraging, with more good news expected through the summer and into the autumn months.”

The Conference Board’s Consumer Confidence Index rose in May to 83, after falling off a post-recession high in March of 83.9. Other Conference Board indicators — the Employment Trends Index, its Leading Economic Index as well as the measure of CEO confidence — have also risen in the last two months.

With May’s payroll additions, employment now stands at 138.46 million, just above the peak in January 2008. However, the participation rate — the percentage of working and unemployed people in the labor force — was unchanged in May at 62.8 percent. It’s the lowest rate in more than 30 years.

All but 1,000 of the new jobs were created by the private sector. Goods producers — those involved in manufacturing (+10,000), mining (+2,100), and construction (+6,000) — added a net 18,000 new jobs. The manufacturing workweek increased by 0.2 hour in May to 41.1 hours, an indication of increasing orders for goods.

The service sector added 198,000 jobs. Sectors with the biggest here were:

  • Healthcare +33,600;
  • Restaurants and bars, +31,700;
  • Temp and other employment services, +20,200;
  • Transportation and warehousing, +16,400;
  • Retail trade, +12,500, with automotive (+6,800) and general merchandise (+5,300) leading the way.

State and federal government shed a combined 10,000, while local governments added 11,000.

Article Continues Below

A Bloomberg survey of nearly 100 economists early in May found that the average of their monthly  job growth predictions was 225,000. That’s not too far off the actual 214,000 so far this year. Last year, the average was 194,000.

Even at 225,000 monthly new jobs, unemployment will only slowly come down. The Labor Department report said there were 9.8 million unemployed people in May; 3.4 million were out of work for more than half a year, a number that has been edging down slowly.

Using the so-called U-6 unemployment numbers — which include individuals working part-time because they can’t find other work, and other individuals out of work, but not officially counted as unemployed — the nation’s labor underutilization rate in May was 12.2 percent seasonally adjusted.

John Zappe

John Zappe is the editor of and a contributing editor of John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.