United States adds fewer jobs than expected

Andrew Cummings
June 3, 2017

But with the labor market expected to hit full employment this year, there is optimism that wage growth will accelerate.

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 USA economy only added 138,000 jobs.

With revisions to March and April's job totals that show 66,000 fewer jobs created than initially reported, the three-month average swooped down to 121,000.

"The really good news is that small firms want to hire, and they are trying hard to create more jobs". However, real wages - the value of workers' pay with inflation taken into account, decreased 0.4 percent in the same time frame.

Job growth slowed last month, according to this morning's report from the Bureau of Labor Statistics. Manufacturing lost 1,000 jobs and construction gained 11,000 new employees.

Elsewhere in currency markets, traders are waiting to see if the Chinese yuan extends its recent strong and surprising gains.

Manufacturing employment fell by 1,000 jobs last month as payrolls in the automobile sector dropped 1,500 amid declining sales. Government was also a drag on job creation, with 9,000 fewer positions.

"There is not going to be a big turnaround in wage growth until productivity picks up", said Andrew Chamberlain, chief economist at the jobs site Glassdoor.

The labor-force participation rate - the share of the working-age population working or looking for work - actually fell last month.

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.

Average hourly earnings were $26.22 last month, rising 2.5% over the year. The May unemployment rate fell to 4.3 percent, from 4.4 percent in April and from 4.7 percent in May 2016, with 6.9 million Americans unemployed in May. Job growth in healthcare has averaged 22,000 per month thus far in 2017, compared with an average monthly gain of 32,000 in 2016.

In May, the average hourly earnings rose 4 cents to 26.22 USA dollars.

The modest payrolls gain could temper expectations of a sharp acceleration in economic growth in the second quarter after gross domestic product increased at a tepid 1.2 percent annualized rate at the start of the year.

But the unemployment rate dropped to 4.3% in May - its lowest level since May 2001.

"We would be surprised if wages were still running under 3 percent, for example, when we get to the end of 2018", said Chris Rupkey, managing director at MUFG Union Bank. "A lot of times people put their hiring on pause in an election year to see what happens with the outcome".

There are, however, fears that political scandals could derail the Trump administration's economic agenda. If you would like to discuss another topic, look for a relevant article.

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