Economy adds just 138K jobs in May
But Fed still likely to raise interest rates
Businesses added 147,000 jobs. Federal, state and local governments lost 9,000. Also discouraging: Job gains for March and April were revised down by 66,000. March was revised to 50,000 from 79,000 and April to 174,000 from 211,000.
A positive sign: A broader measure of joblessness — that includes discouraged Americans on the sidelines and parttime workers who prefer fulltime jobs as well as the unemployed — fell to 8.4% from 8.6%. That means the shadow labor force that has allowed employers to increase pay modestly continues to shrink. Employers added 13,000 temporary workers in a signal they may soon hire more permanent staffers.
Economists said it was unlikely sluggish hiring in May would keep the Fed from raising its key short-term interest rate by a quarter percentage point at a meeting this month.
Hiring slowed substantially in May as employers added 138,000 jobs, but the disappointing showing probably won’t stop the Federal Reserve from raising interest rates.
The unemployment rate, calculated from a different survey, fell from 4.4% to 4.3%, the lowest since May 2001, the Labor Department said Friday.
Economists surveyed by Bloomberg expected 180,000 job gains.
Average hourly wages rose 4 cents to $26.22, holding annual gains steady at 2.5%. Although earnings have picked up the past year or two from a tepid 2% pace, the annual increases have moderated in recent months from nearly 3%. Economists expected the low jobless rate and smaller pool of available workers to push up pay increases more rapidly, a development the Fed seeks to help underpin its plan for two more rate hikes in 2017.