Employers added 217,000 jobs in May to push U.S. payrolls past their pre-recession peak and the jobless rate held at an almost six-year low as the economy gained traction.
The 217,000 advance was broad-based and followed a 282,000 gain in April, figures from the Labor Department showed today in Washington. The median forecast in a Bloomberg survey of economists called for a 215,000 increase. Unemployment in May was unchanged at 6.3 percent.
Improving business confidence as sales grow and the economy rebounds from its worst performance in three years will probably mean headcounts will continue to climb. Rising employment gives Federal Reserve policy makers reason to keep paring back record monetary stimulus.
“It’s in line with where we ultimately think the pace of job growth will be this year,” Michelle Girard, chief U.S. economist at RBS Securities Inc. in Stamford, Connecticut, said before the report. The figure is “consistent with an economy that is growing between 2 percent and 2.5 percent.”
Payroll estimates in the Bloomberg survey of 92 economists ranged from increases of 110,000 to 350,000. May marked the fourth straight month payrolls have increased at least 200,000, the first time that’s happened since September 1999 to January 2000.
Employment in health services climbed by the most in nine months, while payrolls at factories, business services and retailers increased as well. Hourly earnings also picked up from a year ago.
The agency’s survey of households, used to calculated the unemployment rate, showed 192,000 people entered the labor force, almost matching the number who found jobs. The so-called participation rate, which indicates the share of working-age people in the labor force, held at 62.8 percent, matching the lowest since March 1978.
The increase in payrolls put total employment beyond its peak of 138.4 million reached in January 2008, one month after the start of the deepest recession since World War II. The number of employees on payrolls stood at almost 138.5 million last month, Labor Department data show.
“It’s taken an extremely long period of time to gain back all of those jobs, much longer than any other cycle,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC. “ It really drives home how painfully slow the process has been.”
Private hiring increased 216,000 in May. Payrolls excluding government agencies reached 116.1 million in March to surpass the pre-recession peak.
Employment at private service providers rose 198,000, while payrolls increased 10,000 at factories, boosted by hiring at vehicle-assembly plants. Payrolls in education and health services climbed by 63,000 in May. Hiring also accelerated at leisure and hospitality companies.
Today’s employment report also showed average hourly earnings rose 0.2 percent to $24.38 in May from $24.33 the prior month. They were up 2.1 percent over the past 12 months.
Economists surveyed by Bloomberg from May 2 to 7 see the U.S. economy adding 225,000 jobs on average each month this year. That would be up from 2013’s average of 194,250 as well as 186,330 the previous year.
While the economy is creating more jobs, wage growth has lagged behind. Slower pay gains corroborate Fed Chair Janet Yellen’s view that a “substantial amount of slack” remains in the labor market. What’s more, limited income growth stands in the way of faster consumer spending.