US employers add modest 138K jobs; rate dips to 4.3 percent

Author

03 June, 2017

Economists had expected a gain of about 185,000 new jobs in May, but a report from the Bureau of Labor Statistics published on Friday showed that the US economy only added 138,000 jobs.

Economists described the data as "soft", and the value of the dollar fell against a range of currencies amid the modest pay data and downward revisions to job growth in previous months. From over past 12 months, the job gains for the month of May marked a sharp deceleration from the 181,000 monthly averages.

A solid overall report will nearly certainly clear the way for the Federal Reserve to raise rates again in June.

The unemployment rate fell one-tenth of a per centage point to its lowest level since May 2001. Manufacturers let go of 1,000 workers.

The decline in the unemployment rate-while a sign of a tightening job market- was also due to a drop in the size of the labour force, as the number of people classified as employed and unemployed fell by roughly the same amount.

Average hourly pay rose 0.2% in May to $26.22.

The figures showed the U.S. trade gap in goods and services climbed by 5.2 percent to $47.6 billion (42.3 billion euros) in April month on month.

The tight labor market has also been increasingly reflected by a broader measure of unemployment that includes those who can only find part-time work as well as discouraged job seekers.

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Wages in May increased 2.5 percent from the year before, in line with the moderate growth they've shown in recent months.

Mark Zandi, chief economist at Moody's Analytics, estimates that monthly job growth above 80,000 or so should cause the unemployment rate to fall. The U-6 has declined since January to 8.4 percent, an encouraging sign that jobless people who had given up hope of working are now being hired.

"Companies may be taking a more cautious approach to hiring, not because they are anxious about sales, but because they are trying to assess whether the President and Congress will be successful in passing pro-growth policies", Behravesh wrote in a client note.

So far this year, the US has added 810,000 jobs. And whatever meaningful pay raises that exist are going disproportionately to managers and supervisors.

"I don't think today's report will change many minds at the Fed", says Andrew Chamberlain, chief economist at Glassdoor.

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.

The Trump administration has designated the pace of hiring for good-paying skilled jobs in construction, manufacturing and mining as among the key categories it monitors for economic health. Although hiring still has steady momentum, it's slower than in prior years.

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