If May was supposed to be the “tiebreaker” month, after a disastrous March and a solid (if now downward revised) April, then the US economy is not doing well: with only 138K jobs added in the past month, while over 200K actual jobs were lost (per the Household Survey), it was no surprise that the biggest missing link of the so-called recovery, wage growth, was simply not there again.
How is it that with the labor market supposedly near full employment, and the unemployment rate sliding to a post 2001 low of 4.3%, wages simply can not rise?
The answer was once again to be found in the quality of jobs added because in addition to the previously noted plunge in full-time jobs, the biggest in three years, the granular detail from the BLS revealed that all the jobs growth was again in low or minimum-wage sectors such as education and health, which added 47,000, leisure and hospitality up 31,000 jobs of which food services and drinking places workers, aka waiters and bartenders, added another +30,300. Temp help services, by definition the lowest paying job category, added another 12,900 jobs. Combined, these three minimum-wage categories accounted for two-thirds of all April job gains.
Looking at retail workers, which have suffered steep job losses recently as a result of the widespread shuttering of bricks-and-morter outlets, the BLS revised the reported rebound in the last two months, converting it into a job loss. As a result, retail workers have dropped for 4 consecutive months, and at 15.836 million, have dropped to 11 month lows.
Another notable observation: after rising by 11,000 last month, manufacturing workers declined once again, down 1,000 jobs, the first drop in the sector since last October.
Some further observations on the job breakdown, courtesy of Southbay Research:
- Healthcare (+32K): As expected, with ACA repeal dead, Healthcare hiring returns
- Leisure/Hospitality (+31K): As expected, restaurant demand kicks in
- Professional Services ex temp (+25K): As expected, relatively mild Temp worker demand
- Construction (+11K): Mild weather pulled in payrolls, leaving little for May
- Financial (+11K): Housing boom continues to drive financial payrolls
- Transportation (+4K): Supply chain pressure and manufacturing pause slowed demand for trucking
- Manufacturing (-1K): Factories hit the pause button (Trump rhetoric not yet translating into actual activity boost)
- Wholesale (-2K): Consistent with general macro trends (lack of inflation, retail supply chain pressure, inventory pressure)
- Retail (-6K): Grocery store and brick-and-mortar store pressure
The complete breakdown of changes in key job categories in April and May is shown below.