U.S. labour market seems to be ‘firing on all cylinders’

WASHINGTON — 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 per cent from 3.9 per cent in April.

Average hourly pay rose 2.7 per cent from a year earlier, a slightly faster annual rate than in April, the Labour 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 nine-year old economic expansion — the second-longest on record — remains on track. Employers appear to be shrugging off recent concerns about global trade disputes.

Roughly an hour before the employment data was released at 8:30 a.m., 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 officials are not supposed to comment on it beforehand.

Larry Kudlow, the president’s top economic adviser, defended Trump’s tweet in an interview on CNBC, saying that it followed “law and custom.”

“I don’t think he gave anything away, incidentally,” Kudlow said.

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 per cent, a 17-year low. For black Americans, it hit a record low of 5.9 per cent.

“The economy and labour market appear to be firing on all cylinders, with all sectors showing strength,” said Paul Ashworth, chief U.S. economist at Capital Economics.

Investors applauded the report. The Dow Jones rose 221 points, or 0.9 per cent. Other indexes also moved higher.

The healthy jobs data makes it more likely that the Federal Reserve will keep raising interest rates this year — at least twice more and possibly three more times, after having raised its key rate in March. Traders now put the likelihood of four rate hikes for 2018 at about one-third, up from one-quarter on Thursday.

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 fell slightly and is down six per cent 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.

Debbie Thomas, owner of Thomas Hill Organics, a restaurant in Paso Robles, Calif., said that finding enough qualified people to hire is her biggest challenge. She has raised pay by about a dollar an hour in the past year for cooks and dishwashers, but is reluctant to boost wages much higher. The more-expensive organic food she uses also adds to her costs. “You don’t want to price yourself out of the market,” Thomas said.