Unemployment Rate Declines to 4.3%, a 16-Year Low

US employers pulled back on hiring in May by adding only 138,000 jobs, though the gains were enough to help nudge the unemployment rate down to a 16 year-low.

The headline US unemployment rate was 4.3 percent, down from 4.4 percent in April, the BLS reported.

Low productivity growth and the relatively low skill level of many American workers who are getting pulled into the labor market are likely holding back a more rapid increase in wages, said Swonk.

A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, fell two-tenths of a percentage point to 8.4 percent, the lowest since November 2007.

A report by the Commonwealth Fund found that repealing key provisions of the ACA, particularly the insurance premium tax credits and Medicaid expansion, could cause the sector to lose 2.9 million jobs by 2019. North said. The job creation at this point in the recovery is still solid.

Average hourly earnings rose 0.2 percent for the month, and are up 2.5 percent for the year, but this more or less keeps pace with inflation, with the Consumer Price Index for urban consumers also up 2.2 percent over the 12-month period. Hospitals added 7,000 jobs over the month, and employment in ambulatory health care services continued to trend up (+13,000).

A separate survey released Wednesday by ADP Research Institute and Moody's Analytics showed that private employers added 253,000 jobs in May.

The government revised its March and April job totals downward by a total of 66,000. Manufacturing lost 1,000 jobs and construction gained 11,000 new employees. Retailers trimmed their ranks by 6,100 jobs.

In part, this is because unemployment rates continue to rise even after recessions end.

The president has focused on manufacturing jobs, a sector that has seen steady growth since his election.

For now, some companies that are hiring have no plans to raise pay much.

By comparison, the USA added 615,000 jobs between February and April of a year ago, and 586,000 jobs in 2015.

One calendar quirk that may have depressed wage gains in May was that the 15th of the month - when workers who are paid semi-monthly get their checks - fell on the Monday after the survey week, which includes the 12th.

Trade, transportation and utilities added 58,000 net new jobs last month, up from just 9,000 in March. The softer inflation readings over the past couple months have likely weighed on nominal wage growth, according to John E. Silvia, chief economist at Wells Fargo Securities.

"Even though job growth slowed, it's still well above where it needs to be to keep up with the working-age population growth", said Jed Kolko, chief economist at Indeed, an online recruiting site. Many people who had stopped looking for jobs are coming off the sidelines to find them.

Should the Fed hold the line on rates for another few months, it would help ease the pressure on homebuyers by keeping mortgage rates in check, said Steve Hovland, director of research for HomeUnion.

  • Zachary Reyes