May jobs report: 4 things to know

The unemployment rate fell to a 16-year low at 4.3%, likely due to less participation in the labor market.

The past two months of job growth were also lower than originally reported, with March revised down to just 50,000 jobs added and April down to 174,000. Revisions to data from March and April wiped out a combined 66,000 jobs from those months' tallies. Job gains have averaged 121,000 over the last three months, a deceleration from an average of 181,000 over the last 12 months.

The labor market was largely expected to return to form last month after volatile weather made for sharp gyrations the first five months of the year.

Economists are beginning to question whether the economy has reached "full employment" levels - the best indicator being a steady increase in wages as businesses compete over a shrinking number of available workers.

Not only did employers slow their hiring during May. Pantheon Macroeconomics' chief economist, Ian Shepherdson, observed that "employers are still able to find the people they want, though surveys and anecdotal evidence strongly suggest that it is becoming harder to find qualified staff". Average hourly earnings were $26.22 last month, rising 2.5% over the year. However, segments of the economy that affect commercial space absorption still had reasonably good job creation. He said this because of a large decrease in the labor force that outpaced a decline in household employment.

"We're clearly bringing people back into the job force", Cohn said.

Cohn said Friday on Bloomberg Television that "we still think there's an bad lot that we in the administration can do" on taxes, regulation and infrastructure to bring people back to the workforce and boost wages.

Restaurants and healthcare firms posted solid job gains.

As we've written before, weird things can happen when an economy approaches "full employment," namely that there's less scope for bumper growth in jobs every month. But Jim O'Sullivan, chief US economist of High Frequency Economics, noted that seasonal adjustments can be especially tricky in May, prompting him to forecast just 140,000 employment gains.

Employment in health care rose 24,000 in May, with mining adding 7,000 jobs, and professional and business adding 38,000 positions. Both quarterly and annual statistics reveal positive trends in manufacturing (3.6% growth in Q1 and 8.8% growth year-on year), finance (2.1% in Q1 and 6.8% year-on-year) and construction (1.5% in Q1 and 10.5% year-on-year) among other sectors. And manufacturers let go of 1,000. Retailers trimmed their ranks by 6,100.

Few foresee another downturn looming, in part because the recovery from the recession has been steady but grinding, and there's been little sign of the sort of overheated pressures that normally trigger a slump.

There were 5,219,000 Americans working part-time in April who would rather have a full-time job but cited economic reasons for not having such employment.

But the influx of job seekers can also inflict a drag on pay growth. But it is worth paying close attention to the industry's direction; there are almost 16 million retail jobs in the U.S. Manufacturing, which tends to get far more attention from politicians, employs 12 million people.

  • Zachary Reyes