WASHINGTON (CBSNewYork/AP) — U.S. employers extended a streak of solid hiring in May, adding 223,000 jobs and helping lower the unemployment rate to an 18-year low of 3.8 percent from 3.9 percent in April.
Average hourly pay rose 2.7 percent from a year earlier, a slightly faster annual rate than in April, the Labor Department reported Friday. But pay growth remains below levels that are typical when the unemployment rate is this low.
Still, the report shows that the nearly 9-year old economic expansion — the second-longest on record — remains on track. Employers appear to be shrugging off recent concerns about global trade disputes.
Experts told CBS2’s Dave Carlin say the American and workforce is growing stronger.
The top three growth field are retail, health care and construction. Wages are on the upswing as well.
“May’s numbers show sharp improvement,” said CBS MoneyWatch correspondent Diane King Hall. She added more people are working and making more money, which is sparking more spending.
“It does bode well for the strength of the economy,” she said. “Whether you’re talking about job gains, wage gains or the unemployment rate ticking down, across the board a strong report that helps to fuel optimism in the market, and we saw that. Indeed we did.”
Roughly an hour before the employment data was released at 8:30 a.m. Eastern time, President Donald Trump appeared to hint on Twitter that a strong jobs report was coming. “Looking forward to seeing the employment numbers at 8:30 this morning,” he tweeted.
The president is normally briefed on the monthly jobs report the day before it is publicly released, and he and other administration officials are not supposed to comment on it beforehand.
The last time the unemployment rate was at 3.8 percent was in April, 2000. Unemployment hit an alarming 10 percent in Oct. 2009, but then began trending down. At the beginning of 2018, it was at 4.1 percent. On the heels of tax reform, it is now at 3.8.
The figure is being called historicy becaue the number also marks a 50 year low, by matching the 3.8 percent rate of 1969.
“I think it’s pure energy and drive,” said Stephen Viscusi, an employment expert.
He says this jobs report is all about faith in America and policies that are working.
“I do think the tax incentives are going to have a better opportunity to help jobs than people think, or give it credit for,” he said.
Viscusi said those seeking a job in the Tri-State area can find good opportunities in trucking, hospitality and at the airlines. Nationwide, the medical field is where the growth is.
Friday’s report showed that hiring in the United States is benefiting a wider range of Americans: The unemployment rate for high school graduates reached 3.9 percent, a 17-year low. For black Americans, it hit a record low of 5.9 percent.
“The economy and labor market appear to be firing on all cylinders, with all sectors showing strength,” said Paul Ashworth, chief U.S. economist at Capital Economics.
With the jobless rate so low, employers have complained for months about the difficulty of finding workers to fill jobs. The number of open positions reached a record high in March. Friday’s report suggests that some companies are making extra efforts to find people.
For example, the number of part-time workers who would prefer full-time jobs declined slightly and is down 6 percent from a year ago. That may mean that businesses are converting some part-timers to full-time work.
Companies are also hiring the long-term unemployed — those who have been out of work for six months or longer. Their ranks have fallen by nearly one-third in the past year. That’s important because economists worry that people who are out of work for long periods can see their skills erode. Yet employers now seem more willing to hire them.
The job gains in May were broad-based: Professional and business services, which includes higher-paying fields such as accounting and engineering, added 31,000 jobs. Health care, a consistent job engine for the entire recovery, gained nearly 32,000.
Manufacturing added 18,000 jobs and construction 25,000.
The solid hiring data coincides with other evidence that the economy is on firm footing after a brief slowdown in the first three months of the year. The economy grew at a modest 2.2 percent annual rate in the January-March quarter, after three quarters that had averaged roughly 3 percent annually.
Some economists remain concerned that the Trump administration’s aggressive actions on trade could hamper growth. The administration on Thursday imposed tariffs on steel and aluminum imports from key allies in Europe, Canada and Mexico. Earlier in the week, it threatened to hit China with tariffs on $50 billion of its goods.
Still, while Trump has made such threats since March, most employers so far haven’t suspended hiring.
And consumers have started to spend more freely, after having pulled back in the January-March quarter. That gain could reflect in part the effect of the Trump administration’s tax cuts, which might be encouraging more Americans to step up spending. Consumer spending rose in April at its fastest pace in five months.
Some of the spending reflects more money needed to pay higher gas prices, a potential trouble spot for consumers in the coming months. The average price of a gallon of gas nationwide reached $2.96 on Thursday, up 15 cents from a month ago, according to AAA. Some economists calculate that higher gas costs could offset up to one-third of the benefit of the tax cuts.
Companies are spending more on industrial machinery, computers and software — signs that they’re optimistic enough about future growth to expand their capacity. A measure of business investment rose in the first quarter by the most in 3 1/2 years. That investment growth has been spurred partly by higher oil prices, which have encouraged the construction of more drilling rigs.
Manufacturers have benefited from the healthier business spending and have increased hiring. In April, factories expanded production of turbines and other heavy machinery by the most in seven months.
Macroeconomic Advisers, a forecasting firm, says it now foresees the economy expanding at a robust 4 percent annual pace in the April-June quarter, which would be the fastest in nearly four years. That is up from its forecast last week of less than a 3 percent rate for the current quarter.
Yet even with unemployment at an 18-year low, wage growth has been chronically sluggish in most industries, leaving many Americans still struggling to pay bills, particularly as inflation has ticked up. Still, companies are starting to pay more to lure workers from other companies, a trend that could lead to broader pay gains in coming months.
Mark Zandi, chief economist at Moody’s Analytics, said higher pay for job-switchers tends to augur more robust raises for everyone else.
(© Copyright 2018 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)