- U.S. Adds 138,000 Jobs in May
The U.S. labor market added fewer jobs than expected in May, even though unemployment rate improved to a 16 year low.
Employers in the U.S. added 138,000 jobs to payroll in May, the Labor Department said on Friday. This is below the 182,000 jobs projected by economists and marked a sharp drop from the 180,000 monthly average recorded over the past 12 months.
The data for March and April were revised to show 66,000 jobs fewer than previously reported.
However, the unemployment rate improved to 4.3 percent from 4.4 percent in April, suggesting that while employers are creating jobs participation rate is still low.
Also, the quality of the jobs being created has shown they are low paying jobs. Hence, part of the reasons wage is stagnant, even at a 16-year low unemployment rate.
On a monthly basis, average hourly earnings rose 0.2 percent in May, same as April. While on a yearly basis wage rose by 2.5 percent.
“I wouldn’t worry too much about monthly payrolls,” Jim O’Sullivan, chief U.S. economist at High-Frequency Economics in Valhalla, New York, said before the report. “The labor market continues to be tight.” Jobless claims indicate “there’s no sign of any significant weakening in demand for labor.”
While the economy has shown consistency in job creation, earnings and pricing continued to impact economic progress. Therefore, it is unlikely the Federal Reserves will raise rates in June –especially with political uncertainty in the U.S. that is likely to weigh on business sentiment and capital inflow.