The Midwest Rises

U.S. employers added a robust 254,000 jobs in May, with a surprising twist.

U.S. employers added a robust 254,000 jobs in May, with a surprising twist. According to an analysis by Yardi Matrix, growth was led by metros in the Midwest, while some of the markets that have been strong in recent years underperformed. In the top 50 metros with a population of 1 million or more, employment grew by 0.8 percent month-over-month, in line with the 0.7 percent national average, while unemployment rose 20 basis points to 5 percent.


The overall numbers represent an annualized rate of three million per year, in line with 2014 employment numbers. What was unexpected, however, was the makeup of the job growth on a metro level. Four of the top five metros in terms of absolute job growth are from the Midwest and the fifth is nearby Pittsburgh. Meanwhile, the bottom five metros include markets such as Seattle and Boston that generally have been adding jobs at a robust rate in recent years.

The list of gainers was led by Detroit, which added 51,200 jobs, or 2.6 percent. The Motor City was followed in the top five by Indianapolis, Pittsburgh, Columbus and Cincinnati. A number of factors are boosting the Midwest, including a rebound in housing, but likely the biggest driver of growth is the resurgent auto industry, which has a ripple effect throughout the region. Auto sales in the U.S. are up to a 17 million-per-year pace.

Even with recent gains, Detroit remains 10,000 jobs below its total a year ago, so it is too soon to proclaim a recovery. But the metro has begun to evolve into a more diversified economy due to the efforts of financiers such as Dan Gilbert, who invested more than $1 billion to spur a revival.

On the other end of the spectrum were Dallas ( down 5,300) and Seattle ( down 4,200), which were the only two metros to shrink employment during the month, as well as Portland, Boston and Houston. All of these have been among the better performing markets over the past couple of years. Dallas and Houston may be starting to see the effect of low oil prices.

Despite the number of overall jobs added, unemployment rose 0.2 percent month-over-month in May to 5 percent, and the unemployment rate increased in 43 of the largest 50 metros. Cleveland and Memphis had the highest month-over-month increases, at 0.7 percent each, while Las Vegas (down 0.6 percent) and Phoenix (down 0.2 percent) were the two metros with the greatest decrease in unemployment rate.