Last week’s jobs report was lackluster, while layoffs fell, and construction spending was down.
The economy had its worst monthly jobs performance in six years, with the economy adding only 38,000 jobs in May, the Bureau of Labor Statistics reported last week. That said, the number of unemployed Americans dropped by 484,000 to 7.4 million people out of work, and the overall unemployment rate fell by 0.3 percent to reach 4.7 percent.
The reason for a decline in the unemployment rate in a month that saw weak job growth was because the labor force is shrinking. May’s labor force participation rate — the percentage of employable Americans who either have jobs or trying to get jobs — fell by 0.2 percent to 62.6 percent. This is part of a trend that has seen the rate fall by 0.4 percent over two months.
“This just does not square with all the other things we’re seeing in the economy,” PNC Financial Services Group Chief Economist Gus Faucher told the Washington Post. “This is no reason to panic, and I still think the fundamentals remain solid.”
The number of people unemployed for 27 weeks or longer fell by 178,000 to 1.9 million in May, accounting for 25.1 percent of the total unemployed population. The number of Americans involuntarily employed on a part-time basis for reasons such as only being able to find those hours or because their hours were cut grew by 468,000 to 6.4 million in May.
Initial Jobless Claims
In more recent employment news, first time claims for unemployment benefits filed by the recently laid off during the week ending May 28 notched down to 267,000, a decline of 1,000 claims from the preceding week’s total of 268,000, the Employment and Training Administration reported last week. The four-week moving average, considered a more stable measure of layoffs, dipped to 276,750, a drop of 1,750 claims from the prior week’s unrevised average of 278,500.
For the 65th week in a row, first-time claims were below the 300,000-claim mark that economists consider an indication of a growing job market. This is the first time since 1973 that the job market has had such a streak.
Construction spending in April saw its largest monthly drop since January 2011, with spending for the month declining 1.8 percent to hit an annual rate of $1.13 trillion, according to last week’s Census Bureau report. That said, compared annually, April’s spending was still 4.5 percent better than April 2015’s pace of $1.08 trillion.
The drop was felt across all segments of construction. Spending on private construction fell 1.5 percent to an annual rate of $843.1 billion, with residential construction also dropping 1.5 percent to an annual rate of $439.7 billion.
This week we can expect:
- Tuesday — First quarter productivity from the Bureau of Labor Statistics; consumer credit for April from the Federal Reserve.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration; wholesale inventories for April from the Census Bureau.
- Friday — May budget from the Treasury Department.