The Job Creation Pattern

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The Economic Policy institute reports:

For the second month in a row, the nation's employers added fewer workers than expected, according to today's report from the Bureau of Labor Statistics (BLS). Payrolls were up 75,000 in May, while analysts expected gains of around 175,000. As the figure below shows, employment growth has slowed consistently since February.

Ignoring months affected by the Gulf Coast hurricanes, May's gain is the smallest since July of 2004. Prior to the recent deceleration, payrolls were on a trend of about 200,000 jobs per month. Thus far this year, the average monthly addition is just below 150,000, generally considered an adequate level of job growth in that it is strong enough to prevent the unemployment rate from rising (unemployment ticked down insignificantly in May, from 4.7% to 4.6%).

However, the clear deceleration in job growth, in tandem with other weak indicators in today's report (both average weekly hours and total hours over the whole economy fell in May), point towards a possible downward shift in net job creation.