Another decent, but not spectacular, jobs report out today with the economy adding 217,000 jobs in May, slightly below estimates of 220,000. The unemployment rate held steady at 6.3%. With the average growth in jobs in 2013 around 194,000 a month, the question whether the economy is doing better than expected is starting to sound like a yes.
Digging a little deeper beyond the headline number, not all is copacetic. Two important sectors to the economy, manufacturing and construction, added only 16,000 jobs last month. In addition, the labor-force participation rate (which measures the share of Americans older than 16 who are actively looking for work or who have a job) was unchanged at 62.8%, matching a 36-year low.
In the attached video, Jim Paulsen of Wells Capital Management says the positives are definitely outweighing the negatives when it comes to job growth in the U.S. “I think it’s steady as you go,” he says. “I think this is really good report… and there’s nothing in this report that’s going to change that anytime soon.”
As for those labor force participation rate that some might find worrying, Paulsen was quick to dismiss its importance, suggesting its decline is mostly due to aging demographics as baby boomers age and retire.
Most importantly Paulsen made a strong point to note that the U.S. economy was “sustaining now above 200,000 payroll gains on a regular basis, nearly twice the amount necessary to bring down the unemployment rate in this country on a regular basis, because the working age population is only growing 110,000 a month.”
The growth in jobs in this country means the U.S will see a very positive effect on the unemployment rate too. “We’re growing at twice the rate necessary to sustain the level of unemployment, which means we’re going to head into the fives here I think maybe before the year’s out.”
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