May 2015 Employment Report

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According to the Bureau of Labor Statistics’ (BLS) establishment survey, non-farm payroll employment increased by 280,000 jobs in May -- well above expectations of 220,000. Moreover, combined March and April employment gains were revised upward by 32,000 (March: +34,000; April: -2,000). Meanwhile, the unemployment rate (based upon the BLS’s household survey) ticked up to 5.5% as the labor force grew (+208,000), although the number of employed workers grew faster (+272,000) than the number of unemployed (+125,000). 

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Observations from the employment report include:

* The disparity in jobs gains between the establishment (+280,000) and household (+272,000) surveys virtually disappeared.

* The downturn in oil-sector (part of the Mining & Logging category) employment continued in this report.

* Nearly two-thirds (182,500) of job growth occurred in the sectors typically associated with the lowest-paid jobs: Education & Health Services +74,000; Leisure & Hospitality +57,000; Retail Trade +31,400; and Temp Help +20,100.

* The ongoing narrowing in the number of Manufacturing versus Food Service & Drinking Places (FS&DP) jobs continued in May. Interestingly, in January 2000, there were 9.168 million more U.S. manufacturing jobs than FS&DP jobs. As of May 2015, the gap has shrunk to 1.306 million. Although the number of manufacturing jobs was 181,000 higher than April 2014, the concurrent growth rate in FS&DP jobs was nearly double that (+355,400). 

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* After four months at 59.3%, the employment-population ratio ticked up by 0.1% (to 59.4%); also, the number of employment-age persons not in the labor force fell by 208,000. 

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* The labor force participation rate returned to the upper end of the range it has exhibited during the past year (+0.1 percentage point, to 62.9%). Average hourly earnings of all private employees rose by $0.08, resulting in a 2.3% year-over-year increase. For all production and nonsupervisory employees (pictured above), hourly wages rose $0.06 (+2.0% YoY). With the CPI running at an official rate of -0.2% (YoY), wages are technically rising in real (inflation-adjusted) terms. The average workweek for all employees on private nonfarm payrolls remained at 34.5 hours in May. 

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* Finally, full-time jobs increased (+630,000) while part-time jobs retreated (-232,000). Full-time jobs have been trending higher since December 2009, but are still 473,000 short of the pre-recession high. Part-time jobs, by contrast, have been stuck in a channel between roughly 27 and 28 million.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.