The unemployment rate fell by 0.3 percentage point to 4.7% in May, and nonfarm employers added just 38,000 workers, the Labor Department said Friday.
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Analysts had expected a gain of 160,000 jobs in May.
If you insist on a silver lining, here it is: It’s probably less likely now that the Fed will raise interest rates at their next meeting. Another key factor – the USA economy is considered to be at or near “full employment” and it’s expected that hiring will slow down to a certain degree. The gain was the smallest since September 2010 and is sure to add to speculation that a rate hike could be delayed until July, already ncertainty about Britain’s referendum to exit the EU. Still, unemployment below 5%, however the United States got there, suggests a labour market doing a lot better than many other countries.
The U.S. economy created the fewest number of jobs in more than five years in May, hurt by a strike by Verizon workers and a fall in goods producing employment, pointing to labor market weakness that could make it hard for the Federal Reserve to raise interest rates. Employment gains were also restrained by a month-long strike by Verizon workers, which depressed information sector payrolls by 34,000 jobs.
While acknowledging the weakness of the new report, Jason Furman, the chairman of the White House Council of Economic Advisers, pointed out that so far this year jobs growth has averaged 150,000 jobs a month, “well above the pace necessary to maintain a low and stable unemployment rate”.
Financial markets largely priced out a rate increase at the Fed’s June 14-15 policy meeting after Friday’s data, according to CME Group’s FedWatch program.
The official, Lael Brainard, a Fed board member, said recent economic developments have muddied the picture of the USA economy.
“This jobs report is troubling news”, Republican Rep. Kevin Brady said in a statement. Over the year, average hourly earnings have risen by 2.5%.
The jobs numbers are far weaker than anticipated, but the unemployment rate and number of unemployed people did still decline.
Three months ago, he started his own business selling burritos out of a friend’s food truck on weekends.
Economists say wage growth of between 3.0 percent and 3.5 percent is needed to lift inflation to the Fed’s 2 percent target.
On the employment side, the Kansas City metro area was estimated to have 1.1 percent more payroll jobs in April 2016 than April 2015, a net gain of 11,600 jobs.
Average hourly earnings for all employees increased 5 cents to 25.59 US dollars, following an increase of 9 cents in April. The Labor Department did not count the striking workers on employers’ payrolls in May, although that would be partially offset by the hiring of some temporary workers to take their place.
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Some Fed officials, including Fed chair Janet Yellen, have said recently that if the economy continues to improve, it’s appropriate to raise the rates in the coming months.
