The Bureau of Labor Statistics released the May Jobs Report earlier today (pdf here) and has stunned forecasters and economic analysts with incredible results. Over 223,000 jobs were created in May, and the unemployment rate drops to 3.8%.
As the New York Times is forced to admit, there are not enough words to describe just how good these results are amid the continued growth of the U.S. economy. Accepting the BLS heavily manipulated jobs numbers during the Obama years, the BLS is forced to attempt to reconcile the scale of monthly job gains (223k) and an unemployment rate that has seemingly dropped below the floor of reasonable possibility. As a result 3.8% is the lowest unemployment rate since April 2000; and if the unemployment rate drops another 0.1% it will be the lowest unemployment number since the 1960s.
Average monthly employment growth in 2018 now averages a whopping 207,000 jobs per month. These monthly average gains are faster than gains in both 2016 and 2017. Collectively, the U.S. economy has added nearly 3 million jobs since President Donald J. Trump took office.
White House: “Job growth has been strong across the board during the first 16 months of this Administration, and the gains in the goods-producing industries (manufacturing, construction, and mining and logging) have been especially robust. After averaging gains of 27,000 jobs per month during President Obama’s second term, these industries have almost doubled the pace of hiring to 46,000 jobs per month since January 2017. Manufacturing gains have picked up even more speed: Monthly gains have averaged 19,000 per month since President Trump took office after increases of only 8,000 per month, on average, during the second term of President Obama.
Increases in manufacturing employment since January 2017 reflect increased confidence among America’s manufacturers, but they also reflect changes in the investment decisions of other American businesses. The Morgan Stanley measure of capital expenditure investment plans shows that these plans are at historically high levels, in part due to the incentives emerging from the Tax Cuts and Jobs Act. According to the second estimate of Q1 real GDP released earlier this week, real business fixed investment grew 9.2 percent at an annual rate during Q1, with strong growth in structures, equipment, and intellectual property investment. (more)
Total nonfarm payroll employment increased by 223,000 in May, compared with an average monthly gain of 191,000 over the prior 12 months. Over the month, employment continued to trend up in several industries, including retail trade, health care, and construction:
♦In May, retail trade added 31,000 jobs, with gains occurring in general merchandise stores (+13,000) and in building material and garden supply stores (+6,000). Over the year, retail trade has added 125,000 jobs.
♦Employment in health care rose by 29,000 in May, about in line with the average monthly gain over the prior 12 months. Ambulatory health care services added 18,000 jobs over the month, and employment in hospitals continued to trend up (+6,000).
♦Employment in construction continued on an upward trend in May (+25,000) and has risen by 286,000 over the past 12 months. Within the industry, nonresidential specialty trade contractors added 15,000 jobs over the month.
♦Employment in professional and technical services continued to trend up in May (+23,000) and has risen by 206,000 over the year.
♦Transportation and warehousing added 19,000 jobs over the month and 156,000 over the year. In May, job gains occurred in warehousing and storage (+7,000) and in couriers and messengers (+5,000).
♦Manufacturing employment continued to expand over the month (+18,000). Durable goods accounted for most of the change, including an increase of 6,000 jobs in machinery. Manufacturing employment has risen by 259,000 over the year, with about three-fourths of the growth in durable goods industries.
♦Mining added 6,000 jobs in May. Since a recent low point in October 2016, employment in mining has grown by 91,000, with support activities for mining accounting for nearly all of the increase.
The economic engine is firing with seemingly unstoppable momentum. Today started off with a payrolls report showing a gain of 223,000, well above market expectations of 188,000 – and with the unemployment rate hitting an 18-year low of 3.8 percent, things only look better.
The ISM Manufacturing Index registered a 58.7 reading — representing the percentage of businesses that report expanding conditions — that also topped Wall Street estimates. Finally, the construction spending report showed a monthly gain of 1.8 percent, a full point higher than expectations. This data is helping to fuel expectations the GDP growth in the 2nd, 3rd, and 4th quarter will defy all expectations.
CNBC – Already, the Atlanta Fed’s GDPNow tracker sees the second quarter rising by 4.8 percent. […] Andrew Hunter, U.S. economist at Capital Economics, said the ISM number alone is consistent with GDP growth of better than 4 percent, though he thinks the second quarter will be in the 3 percent to 3.5 percent range. (link)
The pundits are gobsmacked: