U.S. unemployment hits 49-year low

Jeannie Matthews
May 6, 2019

ADP had telegraphed a very strong private sector payrolls report earlier in the week, and the U.S. Department of Labor's Bureau of Labor Statistics (BLS) has just confirmed that trends were accurate.

The business and professional services sector alone added 76,000 jobs, with strong hiring in computer systems design, temporary help services and building and dwelling services like pest extermination, landscaping and housekeeping. Economists were watching government employment closely since the U.S. Census is beginning to ramp up hiring ahead of the 2020 Census. Manufacturers added just 4,000 jobs.

"The U.S. economy grew at a faster pace than expected in the first quarter and posted its best growth to start a year in four years". "The only number you can point that looks disappointing is that manufacturing employment has stalled". Federal employment excluding postal jobs rose by 12,500, still the most since 2010, to 2.21 million. Monday's March update of core PCE, which is the Fed's preferred inflation yardstick, ticked down to a year-over-year rate of 1.6% - an 18-month low.

The unemployment rate fell two tenths to 3.6 percent but the decline was in part because the pool of workers shrank and fewer people were looking for jobs, pulling them out of the labor force. "That is low, but it's only the lowest since 2000".

Employment at construction sites likely increased for a second straight month in April, but storms in the Midwest could have been a drag on hiring in the weather-sensitive industry.

Average hourly earnings rose 0.2 percent from the prior month - analysts had expected 0.3 percent - after an upwardly revised 0.2 percent rise in the prior period. The jobless rate among veterans sits at 1.7 per cent.

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Even the level of long-term unemployed is shifting downwards.

"The economy is good, but that's very hard for employers", said Joe Stagnaro, president of McLane's Pennsylvania operations. He has had a lot of interest from the company's warehouse workers who are eager to learn more skills, earn a commercial driver's license and transition into a higher-paying job.

"Employment gains are strong enough to dispel any immediate concerns over the health of the economy, while wage gains are not strong enough to force the Federal Reserve's hand to tighten the policy stance", said Harm Bandholz, chief US economist at UniCredit Research in NY. He adds that "it's our expectation that the Fed is willing to let the economy run "hot" - and stay on the sidelines - until inflation becomes a much greater concern".

Many economists call the job market "spectacular" at the moment, although they note there are still some pockets of pain where people are struggling.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, was unchanged at 7.3% in April.

Worker productivity has jumped 2.4 percent over the past year, as measured by each worker's output of goods and services on the job, according to Department of Labor data released Thursday and reported by The Wall Street Journal. "And that means we don't think about short-term political considerations". In the past month, 263,000 jobs were added, making unemployment the lowest it has been since 1969. It remains more than double the rate for whites. Unemployment for women over 20 years old fell to 3.1 percent.

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