The last time the U.S. saw job gains like those so far this year, the Dow Jones Industrial Average breached 10,000 for the first time, rapper Eminem released his first major album and the Y2K specter loomed large. In other words, it’s been a while.
Even after a slow start in January, payrolls have added about 214,000 jobs each month on average this year, Labor Department data showed today in Washington. If the pace is sustained for the remainder of the year, it would mark the fastest-growing labor market in the U.S. since 1999, when the economy added about 265,000 jobs on average each month as companies ramped up hiring to prepare their computer systems for the threat of the so-called Year 2000 bug.
“We’re seeing solid job growth -- we’re talking about the fastest rate of growth in well over a decade,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York. “Everyone’s focus is on wage growth, and for all intents and purposes, if the economy is generating this kind of employment growth on a sustained basis, it’s really only a matter of time.”
Employers added 217,000 jobs last month to push payrolls past their pre-recession peak, and the jobless rate held at 6.3 percent -- an almost six-year low. May also marked the fourth straight month payrolls have increased at least 200,000, the first time that’s happened since September 1999 to January 2000, about a year after the debut of Eminem’s “Slim Shady” album.
The payrolls advance, which followed a 282,000 gain in April, nearly matched the median forecast in a Bloomberg survey of economists that called for a 215,000 increase. Unemployment in May was unchanged at 6.3 percent.
The lack of surprise in the payrolls report seemed to damp some of the commotion that surrounds the monthly jobs numbers, which also garner attention on Twitter before their release under the hashtag #NFPguesses.
“Well that was thrillingly, scintillatingly, excitingly boring!” Guy Lebas, chief fixed income strategist at Janney Montgomery Scott LLC, wrote in a note to clients. “Leave it to a good at-consensus number to take the fun out of nonfarm payrolls, which was already trending at about 25 percent of the entertainment level it used to be.”
“This is about as consensus as you can get,” David Ader, head of U.S. government bond strategy at CRT Capital Group LLC in Stamford, Connecticut, wrote after the report. “Yawn.”
The fact that some consider the report boring may actually be a sign of how much the labor market has improved throughout the recovery, Dutta said.
“It tells you about how psychology has shifted in the marketplace,” Dutta said. “If we saw four months in a row of plus-200,000 jobs a year ago, it wouldn’t have been a snoozer.”
The labor market reached another milestone last month as total payrolls pushed past their pre-recession peak. The increase put total employment beyond a high of 138.4 million reached in January 2008, one month after the start of the deepest recession since World War II. The number of employees on payrolls stood at almost 138.5 million last month, Labor Department data show.
Even so, don’t break out the champagne just yet, said Heidi Shierholz, an economist at the Economic Policy Institute in Washington.
Taking into account the trajectory of the labor force before the last recession, the economy is 6.9 million jobs short of its potential, according to Shierholz.
“If we were at full employment right now and you got today’s report, you’d be totally pleased as punch,” Shierholz said. “But it’s entirely the context. We’re still in such a deep hole that a pace like this spells years of ongoing elevated unemployment.”