May Jobs Report: 138000 More On Payrolls; Unemployment Dips Slightly

Paterniano Del Favero
Giugno 8, 2017

Most economists expect job growth to have remained strong in May, though it is likely to come in below the very high figure we saw in April of 211,000 new jobs. That puts average monthly job growth over the past quarter (March through May) at only 121,000 jobs, down by more than 50,000 jobs monthly from the same growth rate of 186,000 jobs/month over the one-year period from May 2016 through April 2017.

"The labour market continues to be tight".

The jobs report was the last major economic indicator to be released before Federal Reserve monetary policymakers gather in Washington on June 13 to decide whether to raise their key short-term interest rate.

"Today's numbers probably won't stop the Fed from raising rates next week. But they might well influence what happens next".

"Firms are adding workers, creating new positions, and increasing compensation to attract better applicants and keep their best performers", said Chief Economist Bill Dunkelberg.

Even if the economy is at full employment, wage growth might be restrained because the pace of productivity gains is now so low.

However, the jobless rate decreased by a tenth of a point to 4.3 per cent.

"We're clearly bringing people back into the job force", Cohn said. The smaller and more volatile survey of households also showed a drop in employment.

The dollar fell against a basket of currencies on the data, while U.S. government bond prices rose. Even so, with the revisions, the three-month average of payroll gains was the weakest since 2012.

Many economists expected hiring to slow as the unemployment rate fell.

The contrasting data could muddy the waters ahead of a Federal Reserve decision on interest rates later this month.

But persistently sluggish wage growth could cast a shadow on further monetary policy tightening.

Wages in May increased 2.5 percent from the year before, in line with the moderate growth they've shown in recent months.

That left the year-on-year increase in wages at 2.5%. If hiring maintains its current pace, it would exceed population growth, and the unemployment rate should eventually fall even further.

There is growing anecdotal evidence of companies struggling to find qualified workers.

The President of United States, who inherited a strong job market, has pledged to boost the economy sharply by strengthening the labor market and slashing taxes.

The Trump administration has designated the pace of hiring for good-paying skilled jobs in construction, manufacturing and mining as among the categories it monitors for economic health.

Cohn highlighted a continued decline in a broader measure of unemployment that includes discouraged out-of-work Americans and people working part time but who want full-time jobs.

Economists surveyed by Bloomberg expected 180,000 job gains. Other experts said the numbers from may can be erratic and are always revised later. Construction added 11,000 jobs. Retail employment fell 6,100, declining for a fourth straight month. "That's forcing them to increase compensation to stay competitive and hire temporary workers, but they are still having a hard time increasing prices to absorb the additional costs".

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