May 2018: The Lowest Unemployment Rate in 18 YearsJune 4, 2018
How low can we go?
After hitting an 18-year low of 3.8%, that’s the question on every one’s mind, as the economy chugs along at a healthy rate on the heels of a tighter labor market.
This is also the lowest read since November 1969.
“It fell for all the right reasons. We had more people coming into the labor market. We saw employers digging deeper into the pool of unemployed,” said Josh Wright, chief economist at the software firm iCIMS, as quoted by CNN.
For the month of May 2018, employers added another 223,000 jobs, better than the 190,000 jobs analysts had expected.
Manufacturing jobs had increased by 18,000 in May 2018.
Professional services added another 22,600 jobs. Education rebounded with a gain of 39,000 jobs. Healthcare added 31,730 jobs. Leisure and hospitality added 21,000.
Mining added another 4,000. Retailers added 31,000 jobs.
Construction added 25,000, and has now risen by 286,000 over the last 12 months.
Meanwhile, average weekly earnings were also better than expected rising 3% in May 2018 from 2.9%. According to Zero Hedge, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.92. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.59 in May.
“Payrolls came in stronger than expected and average hourly earnings were better than expected as well. Following poor weather in March and April, we finally saw a rebound in May. No holes to poke here… these numbers are phenomenal,” said Thomas Simons, senior money market economist, Jefferies LLC, as quoted by Market Watch.
Clearly, the report shows that the nearly nine-year economic expansion — the second longest on record — remains on track, as employers continue to shrug off global trade disputes.
We’re even seeing a 3.9% unemployment rate for high school graduates these days, and a 5.9% record low for African Americans.
Going forward, economists expect for the unemployment rate to sink to 3.5% this year, as jobs growth continues to impress.
In short, the economy is doing just fine, presenting us with plenty of opportunities in the rally. At this pace, Dow 30,000 may not be out of the question this year.