Job Growth Picks Up in May, by Dean Baker: Health care employment has been rising rapidly in the last two months.
The Labor Department reported that the economy added 280,000 jobs in May. With modest upward revisions to the prior two months' data, this brings the average over the last three months to 207,000. Almost all the job growth was on the service side as a drop of 18,000 jobs in mining largely offset a rise of 17,000 in construction and an increase of 7,000 jobs in manufacturing.
The household survey showed a mixed picture. More people entered the labor market, but this was associated with a small increase in the number of unemployed, causing the unemployment rate to edge up to 5.5 percent. On the positive side, the employment-to-population ratio (EPOP) rose to 59.4 percent, its highest level in the recovery. There were few noteworthy changes by demographic group, although the EPOP among college grads increased by half a percentage point to 73.0 percent. This brings their EPOP back to its level of a year ago; it had been lagging.
The duration measures of unemployment all improved modestly, with the share of long-term unemployed falling to 28.6 percent, the lowest level for the recovery. The share of voluntary quits among the unemployed edged down to 9.5 percent. This measure of confidence in the labor market remains far below pre-recession levels. ...
The average hourly wage has risen at a 2.9 percent annual rate over the last three months compared with the prior three months. This compares to a 2.3 percent rise over the last year.
While this report is mostly positive, the strong job growth remains out of line with other data showing a slowing economy. The drop in GDP reported for the first quarter led to a drop of 3.1 percent in productivity. While the first quarter data was weakened due to unusually bad weather and other one-time factors, even excluding the quarter, productivity growth had only increased at just over a 1.0 percent annual rate in the last two years. It is difficult to imagine this is the trend pace of productivity growth in the economy.