The U.S. economy added 175,000 jobs in May, according to an initial Bureau of Labor Statistics report issued Friday morning, exceeding analyst expectations and suggesting the economic recovery, with the support of the Federal Reserve, is enduring despite the contractionary effects of sequestration and higher taxes that took effect earlier this year.
The latest data suggest a steadily improving employment situation, though don’t bear any signs of accelerating growth.
The unemployment rate increased imperceptibly, from 7.5 to 7.6 percent, but that’s notably not a reflection of inadequate job-creation, which on its own can sustain the current unemployment rate with fewer than 100,000 new payrolls a month.
Instead, the uptick is due to a welcome increase in the size of the labor force.The internal figures in the May report are fairly impressive as well, with temporary jobs and retail jobs and health care and service sector employment accounting for a significant fraction of the overall job growth.
However, the report notes that industries and trades like manufacturing and construction (which is an indicator for the health of the housing sector) showed little or no change over the past month.
The most alarming news comes out of the public sector, which continues to be a drag on growth. Overall, government shed 3,000 jobs in May. However, this month the source of the drag came not from state and local job losses, but from the federal workforce, which shed 14,000 jobs, only 3,800 of which were “expected” postal service job losses. The rest of the federal government shed 9,400 jobs — perhaps the first major indicator of the direct consequences of sequestration in a jobs report.
Local governments picked up the slack, adding 13,000 jobs in May, while state governments dropped 2,000 employees.
Taken together, though, the report indicates a very status quo labor market.
Even the revisions, which are subject to much less statistical uncertainty, hardly changed. March figures bounced up from 138,000 to 142,000, after an awful initial showing of 88,000; April figures dipped a bit more significantly from an initial count of 165,000 to 149,000.