Jobs recovery accelerates in May

The March jobs report was disappointing, well below the expectations of economists. But the April jobs numbers rebounded. The May jobs report out today exceeded expectations of economists.

Steve Benen has the May jobs report. Jobs growth soars, 280k jobs created in May:

The new report from Bureau of Labor Statistics shows the U.S. economy added 280,000 jobs in May, well ahead of expectation. The overall unemployment rate inched higher to 5.5%, though it remains at a seven-year low.

The revisions were also generally positive. March’s job totals were revised up, from 85,000 to 119,000, while April’s were just a tad lower, dropping from 223,000 to 221,000. Combined, that’s an addition of 32,000 previously unreported new jobs.

All told, the U.S. has added 3.06 million jobs over the last 12 months. May was the 56th consecutive month of positive job growth — the best stretch since 1939 — and the 63rd consecutive month in which we’ve seen private-sector job growth, which is the longest on record.

Here’s another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.

Neil Irwin at the New York Times adds The Jobs Recovery Is Going Strong:

The recovery in the job market that became more robust in late 2014 and early 2015 wobbled a little in the spring. The message from the May numbers released Friday morning was this: Don’t worry. Everything is just fine.

The headline of 280,000 jobs added in May is the strongest number since December, but that’s just the start of it. An abysmal April job growth number was revised up to merely mediocre. Average hourly earnings rose by a healthy 0.3 percent. And perhaps the best news was in the survey of American households that determines the unemployment rate. The number of people in the labor force rose by almost 400,000, and the ratio of the population with a job ticked up to 59.4 percent, from 59.3 percent.

Not all of the people who joined the labor force found jobs, so the unemployment rate rose to 5.5 percent, but this is a classic case of the jobless rate rising for good, rather than bad, reasons. Americans were sufficiently optimistic about the job market that they joined the labor force.

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The one mystery this leaves is how to reconcile the robust job growth the United States is experiencing with tepid readings on overall economic growth. Gross domestic product contracted at an 0.7 percent annual rate in the first quarter, and based on data that is out so far analysts expect a so-so 2 percent growth reading for the second quarter, which ends June 30. Combine those, and the American economy appears to have grown at something like an 0.7 percent annual rate for the first half of 2015, which is wildly inconsistent with the 217,000 average monthly job creation so far this year.

Indeed, if the January through May average job growth were to hold up for the remainder of the year, it would amount to 1.9 percent growth in the number of jobs in the United States in 2015, a rate more than twice as fast as G.D.P. growth has been.

That leaves a few possibilities. One is we are in the middle of an unfortunate slump in productivity growth, and the nation’s output for each hour worked is stagnating or even declining. That would be terrible news for the long-term future of the economy, particularly if it persists. A second possibility is that there is measurement error, and one or the other of these data sets (either G.D.P. or jobs) is misleading.

Matt O’Brien at the Washington Post’s Wonkblog also highlights this anomaly and speculates as to the causes. Relax, the jobs recovery is back on track:

[I]t isn’t easy to reconcile these good-ish jobs numbers with the decisively not so good numbers everywhere else in the economy. Industrial production has fallen for five straight months. Retail sales have plateaued. And, worst of all, the economy supposedly shrank 0.7 percent at the start of the year. Now, it’s true, as economist  Justin Wolfers tells us, that a better measure shows that it really grew 1.4 percent, but even that is underwhelming. So is the 1 percent or so that the Atlanta Fed thinks the economy is growing right now.

The discomfiting possibility is that we don’t need the economy to grow as much for jobs to grow. Why is that bad? Well, it would mean our workers are doing less with more. And that’s what seems to be happening now. Productivity growth fell 3.1 percent in the first quarter, which might be a blip, but seems like less of one when you consider, as Scott Sumner points out, that productivity has only grown 3 percent in total the past five years. If this past is prologue then the future won’t be as rich as we thought it would be.

It definitely won’t, though, if the Federal Reserve raises rates too soon and too fast. The good news is it probably won’t do that. All the other data has been too weak for the Fed to start hiking later this month, but if jobs growth stays this robust, the central bank could start raising rates in September or December at the latest. That doesn’t mean it should, though. As long as inflation is still so far below target, there’s more than enough reason for the Fed to wait to see how low unemployment can go before the economy overheats.

There is a fundamental restructuring of the economy under way into the “new economy” of the early 21st Century that is under reported because the mainstream media no longer does reporting on economics, labor and business.  They might give you 10 seconds for how the stock market closed today; that’s not economics reporting.

You have to seek out this information from other sources. You are not going to see it in your local newspaper or local tee-vee newscast, or even cable and broadcast news.

Much of the unease people are experiencing with the economy is because they don’t understand what is happening, and why it is happening. This is a massive failure of the media to do its job to inform and to educate the public about what is going on in the economy. I really miss Irving R. Levine.