Each month, the Bureau of Labor Statistics releases a report about the state of American jobs. These reports use data collected from outside agencies and the Bureau’s own analysts to give a precise idea on how many Americans are at working.
As expected, the results from each report have rippling effects on everything from the stock market to American politics and everything in between. For instance, if the average salary is down, consumer spending could be down. This, in turn, could decrease revenues for companies and cause their stocks to decrease as well. This is just one of many hypothetical scenarios, but it proves that these reports are scrutinized, over-analyzed, and used to determine future plans for pretty much everything and everyone.
This month was no different. The BLS released their jobs report for the month of May, revealing how American workers and their companies fared in terms of adding jobs, raising wages, and keeping workers employed. The full report is rather lengthy and complicated, but there’s no reason to read it. Instead, we looked at what it means for you, and how it could have an impact on your financial future.
Jobs are up.
Around 138,000 new jobs were created during the month of May, with a significant number of jobs added in the health care and mining fields. Analysts and economists predicted an increase of 185,000 jobs, so this falls short of what was expected. Compare this to last month, when 211,000 jobs were added and beat the same prediction of 185k. Some economists believe that the job market is nearing capacity, and adding jobs to the American workforce will becoming increasingly harder in the coming months.
Unemployment is down.
Unemployment is at 4.3%. One person out of every 25 is unemployed, which is still one too many but not as bad as before. Unemployment hasn’t been this low since 2001. Compare this to last month, where unemployment was 4.4% and the lowest since before the 2007-2008 crash. Unemployment will likely continue to trend downward in the near future, though it’s been on this trend well before the 2016 election.
Pay is up, but workforce participation is down.
The average wage is up 2.5% compared to May of last year. This means that, as a whole, wages are slightly increasing. At the same time, fewer people are participating in the search for jobs, as only 62.7% of all eligible workers are working or actively seeking work. The rest aren’t looking to rejoin the workforce after either getting laid off, outsourced, or leaving on their own terms. This is troubling, as the same participation percentage was around 66% before the most recent recession.
What does this mean for you?
This increase in jobs will likely cause the fed to raise their rates in the coming months. This will eventually allow you to make more interest in your savings account, which could subsequently decrease participation, demand, and prices in the stock market by a bit. There are many other consequences and effects of raising the fed rate, which you can read all about here.
One thing’s for sure: jobs are up and unemployment is down once again, but they might stay that way forever.