Weak labor market data: Not necessarily a signal of a slowing economy

Last Friday, the Labor Department released employment figures for the month of May. The numbers proved somewhat disappointing. Many economists suggest last week’s weak labor market data means the American economy is slowing down. Some say this slowing economy marks the beginning of the end of the long recovery / expansion following the last recession.

Weak labor market data?

While economists expected the economy to add 180,000 jobs in May, the actual number was a paltry 75,000. And the number of jobs added in the prior months was reduced by 75,000, also disappointing. That means the 2019 monthly average of new jobs is 60,000 jobs lower than in 2018. Oddly, the unemployment rate remained constant at a record low of 3.6%.

Additionally, many employers report increasing difficulty finding qualified employees. They credit this factor for helping to hold down the rate of new hires. It could be yet another factor in our recent weak labor market situation.

While wage growth still exceeds 3% annually, its growth rate did slip a bit from the prior month. That is not consistent with a tight labor market where wage increases are generally expected to occur.

Reports also indicate that the number of unemployed people remained constant at…