Breakneck pace of US job gains seen getting tougher to sustain

Bloomberg

US job growth in May vaulted payroll gains above 1 million in 2018, reaching the milestone a month earlier than in the past two years. Whether the labor market can maintain such a breakneck pace amid a diminishing pool of skilled workers is another question.
Employers added 223,000 jobs last month, more than forecast and bringing payroll gains for the year to 1.04 million, Labor Department figures showed. The jobless rate fell to 3.8 percent to match April 2000 as the lowest since 1969, moving further below the 4.5 percent Federal Reserve officials see as sustainable in the long run. Average hourly earnings increased a larger-than-projected 2.7 percent from a year earlier.
The robust pace of hiring comes amid what employers frequently cite as a shortage of qualified, available workers to fill positions as demand accelerates, with a gauge of US factory backlogs at a 14-year high. Some analysts said that while the report signals job growth may eventually ease, it also bodes well for worker pay — the weak spot so far in an otherwise bright employment picture — and poses a potential source of upward pressure on labor costs and inflation.
“Demand for labor remains pretty vigorous,” said Michael Feroli, chief US economist at JPMorgan Chase & Co. in New York. “Job growth is running in excess of the sustainable pace of the demographically-determined supply of labor. So far, it hasn’t shown up in wage or price inflation but there’s only so long the situation can sustain itself. The unemployment rate is well bel-ow almost anybody’s estimate of sustainable full employment.”
The actual data almost took a backseat to controversy sparked by President Donald Trump’s tweet an hour before the release that he was “looking forward to seeing” the figures. That led to market speculation that the report would be upbeat, and it was, though Trump’s comment broke with past practice of presidents who avoided addressing the jobs report prior to its release.