Employment Update

This morning the BLS released its estimate of employment in May. The headline figure indicates that 75,000 new jobs were created in May, which is well below the expectations of closer to 175,000. Those who were employed actually worked fewer hours in May, and nominal earnings were stagnant after rising at a reasonable pace for the past several months (this means that real earnings fell, of course). All in all, this is a pretty lousy jobs report.

Does this provide evidence of a slowing economy? We’ll need a few more months of weak job readings to tell for sure, but it’s definitely starting to look like a real possibility. Take a look at the picture below, which shows the three-month average of net job growth in the private sector. Clearly the trend over the past few months is not a good one.

Manufacturing employment fell in May, and even hiring in the construction sector slowed substantially; over the last 3 month period only 18,000 new construction jobs were created, compared to 3-month totals that have typically been between 50 and 100 thousand since early 2003. Chalk one up to the slowing housing market.