U.S. employers add modest 138K jobs; rate dips to 4.3 percent
- Author: Zachary Reyes Jun 02, 2017,
Jun 02, 2017, 18:11
With the unexpected decrease, the unemployment rate fell to its lowest level since hitting a matching rate in May of 2001.
USA employers added fewer jobs than expected in May, but the unemployment rate dipped further as the economy headed toward full employment.
Also discouraging is that job gains for March and April were revised down by 66,000.
The Federal Reserve is widely expected to raise interest rates later this month but Friday's numbers may muddy the waters given the mixed picture it presents.
But the jobless rate has fallen 0.5 percentage points since the start of the year, and anecdotal reports in the Fed's own surveys increasingly suggest employers are having difficulty finding qualified workers, which raise concerns that wages will begin to rise, possibly stoking inflation.
But manufacturers, retailers and governments shed workers last month.
Job growth in health care has averaged 22,000 per month thus far in 2017, compared with an average monthly gain of 32,000 in 2016. If hiring maintains its current pace, it would exceed population growth, and the unemployment rate should eventually fall even further below its current 4.3 percent, a level associated with a healthy economy. And the employment report, which was closely watched, released less than two weeks before the Fed's June 13-14 policy meeting.
The 2016 May jobs report stunned everyone when the USA only added 38,000 jobs (it was later revised up a little).
According to the bureau, involuntary part-time workers are "persons who indicated that they would like to work full time but were working part time (1 to 34 hours) because of an economic reason, such as their hours were cut back or they were unable to find full-time jobs".
But the influx of job seekers can also inflict a drag on pay growth. It's only when employers face a shallow pool of job applicants that they tend to feel compelled to raise pay in hopes of hiring people who fit their needs. If that trend continued in May, a falling U-6 would point to a strengthening economy despite weak growth during the first three months of the year.
Annual growth in average hourly earnings has been so-so in recent months.
"There is not going to be a big turnaround in wage growth until productivity picks up", said Andrew Chamberlain, chief economist at the jobs site Glassdoor.
Increases in employment in the professional and business services, healthcare and social assistance and construction sectors were partly off by drops in manufacturing, retail, and government jobs.
Of the 211,000 jobs added in April, more than a quarter were in the generally lower-paying leisure and hospitality industry - hotels, restaurants and amusement parks. Hiring in those three sectors has been comparatively sluggish over the past year.