- KPB & Co Research
US unemployment held firm at 3.6% in May-2019, after the recent job survey was concluded. The unemployment rate remained flat within the context of a 75,000 increase in non-farm payrolls, and a flat labour force participation rate of 62.8%, indicating that the size of the labour force grew during the month. The increase in non-farm payrolls came out less than economists had anticipated adding fuel to the belief that the economy is heading for a marked slowdown.
When examined on a sector by sector basis, it was clear that the pace of employment growth has been steadily heading down across the board. The goods producing sector of the economy had the slowest level of employment growth, registering an 8,000 increase for the month, marking the slowest level of increase for last 3 months, and much slower than that recorded 12 months prior. A similar trend was seen in the private service producing sector where employment growth came out at 82,000. Within the goods producing sector manufacturing, construction, and mining and logging sub-sectors all demonstrated either flat or material slowdowns in jobs created. For private service producing, the worst performers were retail which lost over 7,000 jobs (and has been haemorrhaging jobs at an even higher pace for the last 3 months), information lost 5,000 jobs, and other services which lost 1,000. The loss of jobs in some of the sub-sectors were offset by gains in professional and business services of 33,000, education and health services of 27,000, and leisure and hospitality of 26,000. In spite of the gains in these areas, all of these areas are exhibiting a declining trend in the amount of jobs created. The public sector lost 15,000 jobs during the period.
May's job numbers came shortly after the IHS Markit's May report on US Manufacturing Purchasing Managers' Index, which show that manufacturing firms in the USA are a bit more cautious. The heightened level of cautiousness is centred around the view that higher trade conflict and slower consumer demand will reduce firms' ability to sell products to market in the near term. Consequently, manufacturing firms have been slowing hiring, and manufacturing activity while draining inventory.