Weekly Economic Review: Job Growth Slowed in May, Unemployment Rate Drops

Posted by Laine Smith on 6/3/16 3:44 PM

Topics: Economy

The biggest economic reports released this week pertained to employment data, which did not hit consensus levels for the month of May.

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Image courtesy of ddpavumba at FreeDigitalPhotos.net

According to May’s Employment Situation, job growth slowed with the economy only adding 38,000 non-farm jobs in the month. The report fell extremely short of consensus ranges and followed further downward revisions from April. Slowdown in job growth is widely attributed to the now-resolved Verizon strike. 

Earnings data was also soft with average hourly earnings only up by 0.2 percent. The year-over-year comparison is unchanged at 2.5 percent.

The report included a masked positive, the unemployment rate, which fell to 4.7 in May. This is the lowest level since November 2007, according to the White House, but May’s rate is a result of more Americans stopping their search for work and falling out of the workforce.

Last week in the economy:

  • Purchase applications fell by 5 percent in the May 27 week, according to MBA Mortgage Applications. The refinancing index also dropped 4 percent.
  • Initial Jobless Claims fell by 1,000 in the May 28 week to a 267,000 level, which is the lowest since April. The 4-week average also dropped to a 276,750 level but is still nearly 20,000 above the month-ago comparison.
  • Consumer Confidence lost some traction in May, but Tuesday’s report did highlight some positives. Though the index dropped from a revised 94.7 level in April to 92.6, consumers are expecting to see a future rise in income. The drop in May’s index level is attributed to consumers believing jobs are harder to get.
  • Consumer Comfort rebounded after several weeks of declines. For the week of May 29, the index was up by 1.2 points, which is the best reading since April according to Bloomberg.

What’s on economic calendar for the week of May 30, 2016:

  • Monday – Labor Market Conditions
  • Tuesday – Consumer Credit
  • Wednesday – MBA Mortgage Applications & JOLTS
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
  • Friday – Consumer Sentiment

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