After a period of almost exactly ten years, in May for the first time the US unemployment figure dropped to below seven million again, or so the latest official labour market report shows. With the fifth consecutive decrease the unemployment rate dropped to just 4.3 percent. In other words, the US job engine motor continues to run strong and confirms our picture of robust economic growth in the current and in coming quarters. Given the good labour market conditions, the Fed Governors will hardly be able to avoid announcing the next interest-rate increase before the month is over.
The doubters will presumably now emphasise that the number of employees “only” rose by 138,000 persons in May, thus lagging behind market expectations. Moreover, the number of new hirings in the two preceding months has since been revised downwards by a total of almost 70,000 persons. In our assessment, the US job engine continues to run at a robust pace, however. The quarterly average to date points to a monthly increase of some 160,000 jobs – which almost corresponds to the average for the two prior quarters. This trend is also very much in line with the enduring good economic climate as revealed by ISM surveys. Essentially, the somewhat more restrained pace of hirings probably also points to a pending shortage in duly qualified labour.
A few words are in order on employment in manufacturing, which is particularly the focus of the new US president. According to the May report, the weak upward trend in employment in industry seen in recent months has persisted, with the service sector once again acting as the main job engine. However, recently employment has only risen in the construction industry and in mining. Manufacturing saw employment stagnate after two very strong months. All in all, the figure for jobs in industry is currently just below the 20 million mark, which is on a par with the level at the end of 2008. Nevertheless, the significance of the industrial sector as an employer continues to dwindle: the share of total employment accounted for by jobs in industry has declined steadily in recent years and has now reached an all-time low.