Heritage Employment Report: Economy Runs in Place in May

The May employment report from the Bureau of Labor Statistics shows an economy running in place. Over the past year, employers have created an average of 172,000 net jobs a month. In May, they added 175,000 jobs, and the unemployment rate slightly increased by one-tenth of a percentage point to 7.6 percent. Other measures of labor market strength, such as the employment-to-population ratio, were flat.


Neither the fiscal cliff tax hikes nor sequestration has pushed the economy into a recession. However, there are no signs of acceleration in the labor market’s lackluster growth. Further, millions of Americans have left the labor force, and there are few signs that they will return any time soon.

The May Employment Report

The May employment report showed the economy growing at the same pace it has grown over the past year. The payroll survey showed employers adding 175,000 net new jobs—in line with economists’ expectations. The professional and business services (+57,000), leisure and hospitality (+43,000), and retail trade (+28,000) sectors showed the strongest growth. Employment in health care also continued to increase (+11,000). Within professional and business services, temporary help services (+26,000) and computer systems design (+6,000) showed the strongest gains.

Jobs in most other industries barely moved: Manufacturing, transportation and warehousing, financial activities, wholesale trade, and construction employment all remained essentially flat. Government employment fell negligibly (–3,000) over the month. This overall number masked a noticeable compositional change: Federal employment fell (–14,000), but increased local government hiring (+13,000) offset that drop.

The payroll survey also showed little change in either hours or earnings. The average workweek for all employees remained constant at 34.5 hours, while average hourly earnings rose by one cent.

-James Sherk - Heritage.org



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