US employers add modest 138K jobs; rate dips to 4.3 percent
- Author: Zachary Reyes Jun 02, 2017,
Jun 02, 2017, 20:13
Employment in the USA increased by much less than expected in the month of May, according to a report released by the Labor Department on Friday. According to that report, job growth was strong among construction firms and in professional and business services.
Typically, economists would expect falling unemployment to coincide with better wage gains. March and April data was revised to show 66,000 fewer jobs created than previously reported.
"This jobs report nearly certainly does nothing to shift the Fed's thinking in June, and we expect a rate hike", said Megan Greene, chief economist at Manulife Asset Management. "Generally speaking the labor market remains healthy, and even with today's report, it's still well ahead of what we need to generate, as far as job growth, just to keep with demographics". Wage growth has been basically flat since the recession despite the economy continuing to add jobs.
The unemployment rate for whites declined slightly to 3.7 percent in May.
The Atlanta Fed is forecasting GDP increasing at a 4.0 percent pace in the second quarter. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent. In a note on Thursday, Ian Shepherdson, an economist at Pantheon Macro, noted that this left open the chance for wage gains to miss consensus and perhaps fall to as low as 2.4% year-on-year, which would be the lowest print since February 2016.
The tepid average hourly earnings reading comes as annual inflation rates have retreated in recent months.
It also suggests that the apparently tight labor market still has baggy spots. More part-timers are finding full-time work.
Nonetheless, he argued that full employment, the point at which everyone who wants a job at the current wage can get one, was near.
There are, however, fears that political scandals could derail the Trump administration's economic agenda.
The Labor Department said Friday that the unemployment rate fell to 4.3 percent from 4.4 percent. The job figures point to a likely increase in the Federal Reserve's benchmark rate when the Fed meets later this month. It has rebounded from a multi-decade low of 62.4 percent in September 2015 and economists see limited room for further gains as the pool of discouraged workers shrinks. Retailers and manufacturers shed jobs and leisure and hospitality, a category that includes restaurants, increase at a slower rate.
The U.S. economy added 138,000 jobs last month, less than the 174,000 jobs gained in April and lower than expected.
Government employment decreased 9,000 last month, with state and local governments accounting for all the decrease.