Companies added more workers in the US in May, expanding payrolls by the most in three months, according to this morning’s employment report from the Bureau of Labor Statistics.
Private-sector jobs jumped 218,000 last month, well up from April’s 162,000 advance. The firmer growth rate lifted the year-over-year change to 1.89% — a 16-month high. Meanwhile, the jobless rate ticked down 3.8% in May, an 18-year low.
“This is the last shoe to drop in the labor market,” notes Torsten Slok, chief international economist at Deutsche Bank. “It’s just a matter of time before wages start going up more strongly, but there’s frustration that it hasn’t happened yet, even though unemployment is the lowest it has been in almost 18 years.”
Today’s numbers show that average hourly earnings increased 0.3% last month, following a 0.1% gain in April. Today’s results translate into an annual increase in average hourly earnings of 2.7%, a four-month high.
Today’s report suggests that labor-market growth is picking up speed following several years of deceleration. The year-over-year trend for private-sector employment, which ticked up to 1.89% last month, has been edging higher after bottoming out at 1.62% last September, which marked a trough after more than two years of sliding growth.
“The US economy has this incredible head of steam,” in part due to the growth forces unleashed by last year’s tax cut, says Josh Wright, chief economist at software firm iCIMS.
Today’s employment data certainly supports that analysis. At the very least, the number du jour reaffirms that macro risk for the US remains low and the outlook remains bright for the near-term.
Perhaps, then, it’s fitting that this month marks the ninth anniversary of the current economic expansion, the second-longest on record, based on NBER data. It’s anyone’s guess what’s in store for the months ahead, but if today’s update is a guide the recovery may be strong enough to reach its tenth birthday and beyond, and set a new record for longevity in the process.