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Economy in Brief
German PPI Rises at Nine-Month High Pace
The German PPI gained 0.2% in June on the heels of a 0.6% rise in May...
U.S. Leading Economic Indicators Improve
The Conference Board's Composite Index of Leading Economic Indicators increased 0.5% (5.8% y/y) during June...
Philadelphia Fed Factory Conditions Recover; Prices Surge
The Philadelphia Fed reported that its General Factory Sector Business Conditions Index rebounded to 25.7 during July...
U.S. Initial Unemployment Insurance Claims Hit Lowest Since 1969
Initial claims for unemployment insurance dropped to 207,000 during the week ended July 14...
Japan's Trade Deficit Swings Back to Surplus (Small Surplus)
Japan's early June trade results show a goods trade position having swung back to surplus in June from deficit in May...
by Tom Moeller June 3, 2005
Non-farm payrolls increased just 78,000 in May, the weakest rise since 2003. The prior month's strong gain was revised slightly higher but March was revised lower. Consensus expectations had been for a 180,000 May increase.
Widespread declines in private service producing industries where payrolls rose 59,000 (1.9% y/y) last month accounted for the weakness. Information services jobs fell 8,000 (-0.2% y/y), real estate & leasing jobs were off 1,700 (+2.4% y/y), temporary services jobs fell 4,300 (+5.3% y/y) and jobs in leisure industries fell 6,000 (+2.0% y/y).
Factory sector payrolls fell 7,000 for the fourth monthly decline this year. A 10,000 worker decline in nondurable goods industries (-1.5% y/y) centered in the apparel and the paper industries.
Construction jobs rose 20,000 (4.0% y/y) but that was less than half the prior month's increase. Total government employment rose a modest 5,000 (0.8% y/y). Federal government jobs increased 1,000 (-0.4% y/y) and local gov't employment rose 5,000 (0.8% y/y). 
The household survey indicated that the unemployment rate fell unexpectedly to 5.1%, the lowest level since 2001. Employment again was strong posting a 376,000 (1.9% y/y) rise and the labor force rose 360,000 (1.4% y/y). The labor force participation rate moved higher for the second month to 66.1% as the number of dropouts from the force fell for the second month. Growth in dropouts fell to 0.8% y/y, down from the high of 3.7% late in 2003.
The index of aggregate hours worked (employment times hours worked) rose a slight 0.1% (2.3% y/y) and the gain in April was scaled back to 0.6% due to a downward revision to the length of the workweek. The level of hours worked so far in 2Q is up 3.4% (AR) from 1Q05.
The increase in average hourly earnings slowed to 0.2% though earnings in manufacturing rose a strong 0.4% (2.7% y/y).
What's Driving Wage Inequality? The Effects of Technical Change on the Labor Market from the Federal Reserve Bank of Richmond can be found here.
| Employment | May | April | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Payroll Employment | 78,000 | 274,000 | 1.5% | 1.1% | -0.3% | -1.1% |
| Manufacturing | -7,000 | -9,000 | -0.3% | -1.2% | -4.9% | -7.2% |
| Average Weekly Hours | 33.8 | 33.8 | 33.8 | 33.7 | 33.7 | 33.8 |
| Average Hourly Earnings | 0.2% | 0.3% | 2.6% | 2.1% | 2.7% | 2.9% |
| Unemployment Rate | 5.1% | 5.2% | 5.6% | 5.5% | 6.0% | 5.8% |
