The Economy

Unemployment Falls To Lowest Levels Since Dot-Com Boom

The economy added 223,000 jobs in May. About 120,000 are needed to keep up with growth in the working-age population.
William SprouseJune 1, 2018
Unemployment Falls To Lowest Levels Since Dot-Com Boom

Employers added 223,000 jobs last month, pushing the unemployment rate to 3.8%, the lowest level since 2000, according to the latest numbers from the Labor Department.

The tightening jobs market could stir fears of inflation and cements expectations the Federal Reserve will raise interest rates this month, Reuters reported.

Paul Ashworth, chief economist at Capital Economics in Toronto, said he expects the Fed to hike interest rates three more times this year.

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Reuters said economists it surveyed had forecast nonfarm payrolls increasing by 188,000 jobs last month and the unemployment rate remaining steady at 3.9%.

The economy added 159,000 jobs in April.

Prior to 2000, unemployment last reached this low level in the 1960s.

But despite the historically low metric, wage gains were just 2.7% year-over-year, in line with recent months. Economists say businesses will have to start pushing up wages to hire the people they need, as many are having trouble finding qualified workers.

The central bank’s most recent Beige Book of anecdotal economic information found notable shortages of truck drivers, sales personnel, carpenters, electricians, painters, and information technology professionals. Its contacts reported difficulty filling positions across skill levels.

Average hourly earnings rose 8 cents in May, to $26.92.

The data was not wholly without drama. Officially, the numbers were released at 8:30 a.m. Eastern Daylight Time, but President Donald Trump, in an early morning tweet, said he was looking forward to seeing them, a signal perhaps that they would be positive. Federal regulations bar employees of the executive branch from commenting publicly on the data until one hour after their release.

Austan Goolsbee, an economic adviser under President Barack Obama, said the president has access to the report but normally doesn’t talk about it publicly because doing so might influence financial markets, adding Trump may have broken the law.

The Labor Department reported gains of 31,100 retail, 31,700 health care, 25,000 construction, and 18,000 manufacturing jobs.

Inflation is currently running just below the Fed’s 2% target.