The economy sent mixed results for the month of May, as just 38,000 new jobs were created and the unemployment rate fell to 4.7 percent. Job gains were expected to be much higher, but a Verizon workers' strike depleted these totals, as 34,000 members did not receive a paycheck last month, according to Reuters.
The lowdown on the economy
May was the recipient of blurred outcomes when it comes to the workforce. The U.S. economy created the fewest jobs since 2010, Reuters reported. Even in light of the Verizon strike, these numbers are dramatically lower than they were in recent months, where job gains were consistently in the hundreds of thousands.
According to Reuters, the unemployment rate also fell to its lowest point since 2007. However, individuals falling out of the labor force likely caused the drop as hiring slowed. Average hourly wage also grew, but only by a mere $0.05 to $25.59. All of this is taken into account as a Federal Reserve interest rate hike looms overhead. While the hike was all but guaranteed to occur in June, the recent jobs report will certainly stave off any action.
"The losses were deeper and more broad-based than we expected, and with the downward revision to previous months, it puts the Fed back on pause," Diane Swonk, an independent economist in Chicago, told The New York Times.
A hike from the Federal Reserve is a signal of an abundantly healthy economy, as it can handle paying significantly more on interest rates. Wage growth has been one of the main arguments against the Fed's doing so, as it hasn't necessarily grown as quickly as job creation. According to The New York Times, yearly wage rise is clocked at 2.5 percent, and needs to jump into the 3.5 percent range year-over-year to trigger a rise in rates.
May could be seen as an anomaly when it comes job growth - the beginning of summer is usually cause for concern as there's a lot of turnover between winter and summer seasonal jobs. The jobs report also might be a signal that the market is starting to normalize after months of consistently high jobs growth. While hiring is down in many sectors, the overall employment situation is still relatively strong, and the Federal Reserve still expects to raise interest rates within the next couple of months.
One sector that does not seem to be as adversely affected was the IT job market. "May was an interesting month," says Vanessa Keenan, Recruiting Manager at Beacon Hill's Technologies Division in Philadelphia. "In our market we did see the slowdown in new jobs, but it still remained a candidate's market in IT because so many skillsets are in high demand and unemployment is low. Job seekers with valuable IT skillsets are still confident that the next opportunity will present itself quickly."
Furthermore, the need for talented IT professionals appears to still be a nationwide trend, rather than a regional one. Ken Cole, Senior Recruiting Manager at Beacon Hill's Technologies Division in Cleveland, adds; "The Cleveland office has not seen any type of decrease in activity, as the IT market has continued to be strong in Northeast Ohio. There are still plentiful opportunities for qualified IT Consultants and companies continue to add staff."
Breaking down the numbers
The Verizon workers' strike contributed directly to 34,000 lost jobs and another 36,000 were dropped from the manufacturing and mining sector. Much of the monthly gains came from the health care sector, and the rest from various industries in smaller amounts, according to the Bureau of Labor Statistics:
- Around 46,000 new jobs were added in health care, which was split between ambulatory health care services, hospitals and nursing care facilities. This puts the sector's yearly gain at roughly 500,000.
- Professional and business services created just 10,000 new jobs, down about 45,000 from last month.
- Job growth in other industries like construction, retail and transportation was so minor that the BLS did not provide data for them.
The slowdown in May reflects the overall economic downturn in the early months of this year. While the overall results are disappointing, there are still a number of opportunities for job seekers in certain industries. Gains in government payrolls, as well as the expected lift that the end of the Verizon strike will bring, will provide options to those who are patient and persistent.
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