On a positive note, the economy created 280,000 jobs in May with widespread gains across industries, as hotels, tech firms, health-care providers, home builders and retailers added workers. The only industry that reduced employees was energy. The jobless rate ticked up to 5.5%, but the increase stemmed from the fact that more people entered the labor force, bringing the participation rate up to 62.9%. So far this year, the economy has added an average of 217,000 jobs each month.
Construction spending rose 2.2% in April, reaching the fastest pace in six years with an annual rate of $1.01 trillion. In the first four months of this year, construction spending amounted to $288.7 billion.
Manufacturing improved in May, with the ISM manufacturing index rising to 52.8, as gauges of new orders and employment increased.
The trade deficit shrank to $40.9 billion in April, following a $50.6 billion gap in March. For the month, exports amounted to $189.9 billion while imports totaled $230.8 billion. For the first quarter, the trade deficit with China widened to $89.1 billion, while the balance with OPEC countries shifted from a deficit to a $6.2 billion surplus.
On a less positive note, factory orders slipped .4% in April, marking the eighth decline in the past nine months.
Consumer spending was flat in April as Americans increased their savings. While incomes rose .4%, the amount consumers tucked away in savings climbed to 5.6% (the savings rate has now been above 5% for five straight months).
US productivity dropped more sharply than previously estimated in the first quarter, falling 3.1%, while unit labor costs rose more quickly at a 6.7% pace.