Unemployment Rate Falls to 18-Year Low; Solid Hiring in May

The unemployment rate fell to an 18-year low in May and employers steadily added jobs, signs of enduring strength for the labor market.
U.S. nonfarm payrolls rose a seasonally adjusted 223,000 in May, the Labor Department said Friday. The unemployment rate ticked down to 3.8%, matching April 2000 as the lowest reading since 1969.
Wages in May improved modestly, growing 2.7% from a year earlier.
Economists surveyed by The Wall Street Journal had expected 190,000 new jobs and a 3.9% unemployment rate.
Revised figures show employers added 159,000 jobs in April and 155,000 in March, a net upward revision of 15,000. Through the first five months of the year, employers have added an average of 207,000 workers to payrolls, outpacing 2017’s average monthly growth of 182,000. That runs counter to economists’ expectation for hiring to broadly ease as the labor market tightens.
U.S. employers have added to payrolls for 92 straight months, extending the longest continuous jobs expansion on record.
A tighter labor market should also produce better wage growth, but gains have remained in check, thought they improved somewhat last month.
Average hourly earnings for all private-sector workers increased 8 cents last month to $26.92. The 2.7% annual gain is small compared to prerecesssion readings. Wages haven’t increased at better than a 3% rate from a year earlier since the recession ended in 2009. The last time unemployment was near current levels nonsupervisor wages rose 4.3% from a year earlier. The Labor Department only began tracking wages for all private-sector workers in 2006.
Still, the historically low unemployment rate and modest wage increases should keep Federal Reserve policymakers in line to raise the central bank’s benchmark interest rate at a meeting later this month. Consumer inflation has strengthened in recent months to reach the Fed’s 2% annual target, another factor likely keeping the central bank in line to gradually lift rates further in an effort to make sure the economy doesn’t overheat.
One factor holding wage gains in check is the ability of employers in the past year to bring Americans who have been out of the labor market back into the workforce and dissuade existing employees from retiring or otherwise exiting.
In May, the share of American adults working or looking for a job edged down to 62.7%, but the share with jobs ticked up to 60.4%. Labor-force participation is up slightly from a recent low in 2015, but still near the smallest share of adults participating since the late 1970s, a time when women were still entering the workforce in greater numbers.
To attract additional workers, Timberline Total Solutions, a Omaha, Neb., call center, has sought to increase its flexibility for when employees can work.
“We’ve gotten a lot of feedback that people need the flexibility to take a day off, or leave early to help their son with homework,” said Mitch Kampbell, vice president of operations for the company that provides customer support to clients in the telecommunication and home-security industries. The call center is open seven days a week for at least 12 hours a day, so employees have an opportunity to make up hours when it fits their schedule.
Mr. Kampbell said the flexibility helps attract workers for $11.50- to $14-an-hour jobs, who might otherwise seek to work in retail or food service. Timberline has held starting wages steady in the past year, but offers up to a $2-an-hour bonus for workers who work 85% of their hours during the company’s busiest periods.
Friday’s report showed the health care sector added 31,700 jobs. Employment also grew in construction, manufacturing and retail. Employment fell for temp workers. All levels of government added 5,000 jobs last month.
A broad measure of unemployment and underemployment that includes Americans stuck in part-time jobs or too discouraged to look for work fell to 7.6% from 7.8% the prior month. That rate, known as the U-6, remains somewhat elevated compared to the last time unemployment was similarly low. In December 2000, the broader measure was 6.9%.
The average workweek was unchanged at 34.5 hours in May.
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