The Washington Post
WASHINGTON — The U.S. labor market continued to blossom in May as businesses created 217,000 net new jobs, according to government data, more evidence that the economy is shaking off the winter doldrums.
The strong report, which was released Friday, marks the fourth consecutive month that the country has added more than 200,000 jobs — a key benchmark for a healthy economy. The national unemployment rate held steady at 6.3 percent.
“People will start accepting that the labor market is working better than people think it is,” said Doug Handler, chief U.S. economist at IHS Global Insight.
Wall Street was heading for a new record high Friday on the news. The major U.S. indexes were all up in morning trading, led by a 0.5 percent rise in the tech-heavy Nasdaq.
May’s job gains also mean the country has recaptured all the jobs lost during the recession, and employment is now at an all-time high of 138.4 million people. However, economists were quick to point out that the nation’s population has also grown. The share of people who have a job remains smaller than when the recession started in 2007. An analysis by the liberal Economic Policy Institute found that 7.1 million more positions need to be created to fill that gap.
“There’s no victory laps being done around here,” Labor Secretary Thomas Perez said in an interview. “We have a lot of unfinished business because too many people remain on the sidelines and want to punch this ticket to the middle class.”
Still, the data showed improvement in several key industries. The manufacturing sector added 10,000 jobs in May, particularly in the production of durable goods such as cars. The manufacturing workweek also bumped up 0.2 hours in May.
The biggest job generator was professional and business services, which created 55,000 net new jobs. The health care industry added 34,000 jobs — double the average rate over the past year. Average hourly earnings for workers in the private sector jumped 5 cents to $24.38.
“Wage pressures are rising, and while the rise is modest, we expect it to continue as slack in the labor market continues to lessen,” wrote Diane Schumaker-Krieg, head of research, economics and strategy at Wells Fargo, in a note to clients.
In addition, the number of people in the American workforce inched back up last month after falling dramatically in April. But the small gain was not enough to make a dent in the labor force participation rate, which was unchanged at 62.8 percent. A combination of aging baby boomers, discouraged workers and a lack of new entrants has shrunk the nation’s workforce to the lowest level since 1978.
The robust hiring in May bolsters predictions that the U.S. economy picked up significant speed this quarter after contracting over the winter. Many analysts have forecast an annualized growth rate of 3.5 percent or even higher.
The data also helps justify the Federal Reserve’s ongoing effort to phase out one of its signature stimulus programs. The central bank has slowly been reducing the amount of long-term bonds it buys each month and is widely expected to raise its benchmark interest rate next year for the first time since 2006.
“Encouraging economic data released over the past week suggests the U.S. economy is shifting into a higher gear in the second quarter,” wrote Scott Anderson, chief economist at Bank of the West, in a note to clients before the numbers were released.