Jobs Growth Slows Dramatically In May
KELLY MCEVERS, HOST:
Here's how some are describing the latest U.S. employment numbers - not good, pretty bad, far below expectations. That was the reaction when the Labor Department announced just 38,000 jobs were created last month. So is this the beginning of a trend or is it an aberration? NPR economics correspondent John Ystdie reports.
JOHN YDSTIE, BYLINE: Everyone expected the job growth in May might be a little subdued. Analysts knew a strike by Verizon workers was going to subtract 35,000 jobs from the total. But most economists anticipated about 160,000 jobs would be added. So Diane Swonk of DS Economics says the paltry gains were a body blow.
DIANE SWONK: It was a lousy report not only in its total, which was hurt by the Verizon strike, and we know those workers are now back at work so they'll come back in June. But even beyond that, the losses were broader and deeper than we expected, and there were downward revisions to the previous two months.
YDSTIE: That put the average job growth for the past three months at about half the pace of last year. Presumptive Republican presidential nominee Donald Trump tweeted that the jobs report was terrible. Speaking for the Obama administration, Labor Secretary Thomas Perez acknowledged the numbers were disappointing. But, he argued, a slowdown in job growth is an expected outcome as the economy gets closer to full employment.
THOMAS PEREZ: When you're getting close to the summit of the mountain - and we're not at full employment yet, but we're inching closer to it - what ends up happening, you tend to have lower job growth numbers in any given month. But that's offset by the fact that you see wages go up, and that's exactly what we're seeing now.
YDSTIE: Wage growth has picked up a bit in recent months. Wages are about 2.5 percent higher now than a year ago. But in May, they were once again subdued.
Dyke Messenger, who runs a small manufacturing firm in Salisbury, N.C., says Perez's theory makes some sense. His firm Power Curbers builds machines that make curbs and gutters for housing developments and commercial projects. Messenger says he's actually added jobs in the past month to meet demand. But, he says, the workers he needs are getting hard to find.
DYKE MESSINGER: We employ mostly skilled labor. And there's real demand, and we've had upward pressure on pay, which in the overall scene is good because, you know, it attracts better people. And people's standard of living rises which helps all of us.
YDSTIE: Messenger says he was not surprised to see more jobs lost in manufacturing in May. He points out that firms that make stuff for the oil and gas industry and agriculture are still hurting. But he was surprised to see that the economy lost 15,000 construction jobs because, he says, there's lots of residential and commercial building going on across the country.
Economist Diane Swonk who's based in Chicago thinks the lack of skills may be a factor restraining construction hiring, too. She says lots of workers left the industry during the Great Recession.
SWONK: Some of those skilled workers just aren't there, especially in the skill trade carpenters, electricians, welders, people that we need on big projects. In fact, even if Chicago, they've had to delay some projects because of an inability to find some of those workers.
YDSTIE: Whatever the reason for the lousy May jobs report, Swonk says it will convince the Fed to hold off raising interest rates later this month and possibly skip July, too. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.