Reporting in January on the National Association of Wholesaler-Distributors annual Executive Summit, we noted that economist Alan Beaulieu expected the economy to slow this year, but not crash.
The latest indication that he was right on the money came Friday when the government reported that total nonfarm payroll employment increased by just 73,000 in May, and the March and April gains were revised down.
One reason, of course, was that U.S. factories are paring back production, as The Wall Street Journal reported earlier today. It reported that U.S. manufacturers had their best year since the recession. Industrial production was higher than ever, and manufacturers rapidly boosted employment to nearly 13 million across the sector, helping pull the national unemployment rate to the lowest level in decades. No tree grows to the sky, of course.
The employment report was consistent with the growing sentiment among markets and economists that the U.S. economy is slowing down, the Conference Board noted. Some of this slowdown is coming from the manufacturing sector, where employment growth has almost come to a halt. The slowdown in employment growth could also reflect stronger automation efforts by employers struggling with recruiting and controlling labor cost growth in a tight labor market.
The Conference Board said it still expects the U.S. economy to continue to grow slightly above its long-term 2% trend through at least the end of the year, generating enough job growth to continue tightening the labor market. U6, the broadest measure of labor market slack, declined to 7.1% in May, the lowest rate since 2000.
Wage growth in the establishment survey did not accelerate in recent months, but with the labor market continuing to tighten the Conference Board said it expects an acceleration in wages to resume later in the year. Overall, the job report is another signal that the Federal Reserve will consider a rate cut later in 2019, the Conference Board said.