What employers need to know about the May Jobs Report
By: Lily Martis, Monster contributor
The economy expanded by 75,000 jobs in May, according to the latest monthly U.S. Bureau of Labor Statistics jobs report. Average hourly wages increased by 6 cents, while the unemployment rate remained at 3.6%. Here are the headlines from May’s report.
The Economy is a Dynamic
The BLS reported a weak 75,000 payrolls in May, sharply lower than the 175,000 jobs predicted by Bloomberg economists.
This is in contrast to the 224,000 jobs (revised) in April.
Similarly, earlier this week, payroll processor ADPreported a small gain of 27,000 jobs in the private sector, marking a 9-year low since economic expansion began and the jobs market bottomed out.
These rollercoaster changes can be a bit perplexing, but it’s important to remember that this is only a snapshot, and the economy isn’t static. In theory, there could be as big a rebound in June after the disappointment today.
Services Industry Employment Hits a 7-Month High
With the addition of 33,000 jobs, the BLS report showed that the majority of employment gains occurred in the business and professional services sector.
This jibes with data released earlier this week by the Institute for Supply Management (ISM)that showed a gauge of services industry employment increased by 4.4 points to 56.9%.
This not only beats its two-and-a-half-year low of 55.5% in April, but also marks a seven-month high for the sector. (A reading over 50% is viewed as positive for the economy, and anything over 55% is considered exceptional).
This surge demonstrates that the services sector has held up in the face of growing concerns about the impact of the Trump administration’s trade wars with Mexico and China.
Federal Reserve is Expected to Cut Interest Rates
Ahead of the BLS report, speculationbegan circulating that the Federal Reserve would consider a rate cut in the event of economic weakness.
With May’s low job numbers pointing to a tightening labor market, it’s even more likely that rates will be slashed when policymakers meet later this month.
“This gives us a real sense of deceleration in the U.S. economy,” Diane Swonk, chief economist at accounting firm Grant Thornton, told the New York Times.
“We knew this was occurring, but this could be a summer of discontent. It also gives the Fed a green light to cut rates.”
This can be seen as positive news for businesses, as lower interest rates gives consumers more money to spend, which can create a ripple effect of increased spending throughout the economy.
Employers are Tightening the Purse Strings
Wages continued to slowly build in May, with the jobs report indicating that average hourly wages increased by six cents, totaling $27.83. Over the year, average hourly earnings have grown by 3.1%.
This proves that despite a tightening labor market—the unemployment held at a low 3.6%, while only 75,000 jobs were added—employers must find alternative ways to attract and retain employees.
Employers should consider bulking up compensation packages with more benefits like flexible work options, wellness programs, and increase paid time off. Monster’s 2019 State of the Candidate Surveyfound that 401(k)/retirement benefits was considered most important for American workers.
The next jobs report will be released July 5, 2019, at 8:30 a.m. EST. In the meantime, see how Monster can help drive job growth at your organization.