U.S. unemployment hits lowest level since 2001
- Author: Zachary Reyes Jun 03, 2017,
Jun 03, 2017, 4:33
While the drop in the jobless rate in May looks like good news, it also reflects the fact that some workers left the labor force, with the closely-watched labor force participation rate falling 0.2 points to 62.7 percent. Besides the hiring pullback in May, the government on Friday revised down its estimate of job growth in March and April by a combined 66,000.
In the first five months of 2017, the U.S. has added an average of 162,000 jobs a month.
Private service-providing industries added a net 131,000 jobs, led by gains in education and health services, which added 47,000 during the month, and by professional and business services, which added 38,000. The labor-force participation rate - the share of the working-age population working or looking for work - actually fell last month.
The government's report suggested that eight years into the recovery from the Great Recession, job growth may be slowing after a long stretch of robust gains. However, the gains were enough to help nudge the unemployment rate down to a 16 year-low.
The historically low unemployment rate comes with the caveat that the labor force shrank last month.
Employment in mining rose by 7,000 in May, with most of the increase coming in support services. Instead, Brainard is anxious by the fact that low unemployment and the seemingly strong labor market haven't stoked higher core inflation (which strips out volatile food and energy prices). They also forecast wage growth hovering around 2.6% - a slightly better rate of growth compared to recent years, even though it's still considered sluggish.
Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, and government, showed little change over the month.
Economists have expected wage gains to increase as the job market got tighter, but average hourly earnings increased just four cents in May to $26.22.
However, there are fears that few political scandals could derail the economic agenda of Trump administration. Retailers cut 6,100 jobs. But the May jobs report injects some uncertainty into the decision concerning the small rate hike that investors have been expecting would come this month.