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A spring zing for the job market?

By Mark Hamrick ·
Friday, June 6, 2014
Posted: 11 am ET

The job market remains far from a star performer, but the government's latest update shows that it continues to make progress. Still, those struggling to look for work are wondering when we can say things have returned to "normal." It is safe to say we aren't there yet.

The employment picture for May was in line with economists' expectations: Employers added 217,000 jobs to payrolls, and the unemployment rate was unchanged at 6.3 percent. A month earlier, the jobless rate had plunged largely because people gave up searching for work.

PNC senior economist Gus Faucher notes that "during March, April and May, payroll jobs rose by an average of 234,000 per month." That's above last year's pace of hiring, which was fewer than 200,000 a month.

So who's been hiring?

The Labor Department says professional and business services accounted for 55,000 of the new jobs added in May.

The quality of the new jobs has been a question-mark throughout recent years. But Diane Swonk, chief economist with Mesirow Financial, sees reason for optimism after looking at the May report. "Companies are finally putting their money where their mouths are, in terms of investing in research and infrastructure and providing some kind of a foundation for the future," she says.

Similarly, 55,000 people were hired in health care and social assistance. And , have you been going out on the town? If so, it appears you've had plenty of company -- contributing to growth of some 32,000 jobs at food and drinking establishments last month.

Amid questions about the strength of the housing sector, there was little change in construction employment.

Tension beneath the surface

The number of people "under-employed" remains significant. Those who work part-time but would prefer full-time employment was put at 7.3 million. Also, those unemployed for 27 weeks or longer stood at 3.4 million, accounting for a-third of the total number of jobless.

Another train that hasn't pulled into the station is a pick-up in wages.  Average hourly earnings have risen a scant 2.1 percent over the past year, slightly above the recent pace and a bit above inflation.  Central banks around the world, including our own Federal Reserve, believe inflation is well below where it needs to be.  For consumers to spend more freely, they're going to need to see more in take-home pay.

The politicians weigh in

The political powers-that-be were quick to jump on release of the employment report. The White House noted: "While the consistent pace of job gains means the economy has come a long way in recovering from the Great Recession, the president believes that more can and should be done to strengthen economic growth and expand economic opportunity."

House Speaker John Boehner agreed that more needs to be done. "We have a long way to go before getting beyond this new normal of slow growth," he said in a statement.

The Fed's take

The Federal Reserve's next meeting looms in mid-June. That will provide Chair Janet Yellen an opportunity to react to news of a contraction in first-quarter growth, along with the latest employment figures. Still, the central bank is expected to continue winding down its asset purchases and is likely to keep interest rates at record-low levels for some time to come.

Follow me on Twitter: @Hamrickisms.

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