By no measure are we seeing a booming job market, but we are also not seeing a deteriorating one. In fact, current labor metrics lead us to conclude that the job market remains “good enough” to support our economic growth expectations for the year.
Despite heightened uncertainty around the administration’s trade and tax policies as well as concerns about slowing economic growth, the labor market, a beacon for the direction of consumer spending, remains stable. Metrics such as the number of layoffs and the unemployment rate can dramatically affect the attitudes and spending habits of consumers, who act as the driving force of gross domestic product (GDP).
As released this past Friday, nonfarm payrolls grew 139,000 in May—more than expected and only slightly lower than April’s 147,000. Moreover, job growth in April and May came in at the highest levels reported this year and were just shy of the 155,000 average over the last 18 months. Jobless claims remain in the 210,000-250,000 range reported over the past year while at 1.1%, the layoff rate is the lowest it has been in 12 months.
While we do not believe the current job market is thriving, it does not show material deterioration. It remains “good” enough to support positive economic growth. We maintain our expectation for GDP of about 1% this year amid a non-recessionary slowdown.