Employment Growth Slows in May, but Home Improvement and Maintenance Jobs Continue to Rise


The rate of employment growth slowed considerably in May, with the Employment Situation report from the Bureau of Labor Statistics showing a meager 54,000 increase in total non-farm payroll employment.  This is a marked decrease from the average employment growth of 220,000 per month over the past three months. The report also included downward revisions to the gains registered in March (down to 194,000 from 221,000 previously) and April (down to 232,000 from 244,000 previously).

The unemployment rate continued to edge up in May, rising to to 9.1%, from 9.0% in April and 8.8% in March.  However, this was due mainly to an increase in participation rate, with the labor force increasing 272,000 to 153.7 million due to an increase in discouraged workers returning to the workforce.

Although a disappointing result for May, 783,000 jobs have been added since the beginning of 2011 at an average rate of 156,600 per month. The private sector has contributed a net gain of 908,000 jobs (an average rate of 181,600), but the public sector has shed 125,000 jobs to date in 2011. This marks a notable improvement over the average rate of employment growth of 97,750 jobs per month in 2010. 

It is dangerous to put too much stock in a single month’s jobs report, thus it is too early to say that employment growth is losing momentum.  The weak job numbers in May are likely a response to external factors, such as the flooding along the Mississippi and Missouri Rivers and a string of tornadoes in the Southeast. The Japanese earthquake and tsunami that occurred in March started to have a more noticeable impact last month, creating supply chain problems in the automotive and electrical goods sectors.  These factors likely contributed to poor manufacturing and retail employment numbers. Manufacturing employment fell by 5,000 jobs after an average monthly gain of over 25,000 jobs the previous six months. Retail employment declined by 8,200 jobs in May following a 64,000 jobs increase in April.

Residential construction employment rose a respectable 8,200 jobs (0.4%) in May, with a 14,100 jobs increase in residential specialty trade contractors; however, this was offset somewhat by a   net decline of 5,900 residential building jobs.  Residential construction employment has seen steady improvement since November 2010, rising in six of the past seven months, with 21,700 jobs added since the beginning of the year.  However, this growth has occurred entirely within the home improvement and maintenance sectors, with employment in residential specialty trade contractors increasing by 27,500 jobs. By contrast, employment in residential building has declined on net by almost 6,000 jobs since the start of 2011. The decline in residential building jobs is in line with the weak growth in housing construction, as housing starts have fallen almost 18% between January and April.

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