WASHINGTON (MarketWatch) — The number of new jobs created in U.S. has tapered off since late last year. Is it a speed bump — or the start of a longer-term slowdown?
The employment report for May issued on Friday should offer fresh clues. Economists look for another solid 200,000-plus gain in new jobs and an uptick in wages.
Here are four things to watch in Friday’s report.
Pace of hiring
The economy has added an average of 194,000 new jobs a month in 2015, a rate strong enough to gradually reduce the unemployment rate over time. Yet it’s much slower than the monthly pace of 281,000 new jobs during the second half of 2014.
“We can’t keep going at 200,000 new jobs] a month. That’s not going to happen.”
At some point, job creation has to slow. That’s the inevitable result of an economy growing just 2% a year, especially as the unemployment rate heads toward 5%.
“We can’t keep going at 200,000 a month,” said Ethan Harris, co-head of global economic research at Bank of America Merrill Lynch. “That’s not going to happen.”
Yet Harris and most other economists don’t expect hiring to decelerate until next year at the earliest. They point to the high level of job openings and a surge in hiring by smaller businesses that had kept payrolls lean for years.
The number of new jobs in May is expected to have risen 210,000, according to economists polled by MarketWatch. Only a gain of less than 175,000 would be viewed as a sign of trouble.
The ‘real’ unemployment rate
The official U.S. jobless rate has sunk to a seven-year low of 5.4%, but that makes a chronic unemployment problem look better than it is. The real unemployment rate is 10.8%, according to an alternative measure known as U6.
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