Unemployment rate drops to 4.3% in May

Unemployment rate drops to 4.3% in May

The government's monthly jobs report produces a net gain by estimating how many jobs were created and comparing that figure with how many it estimates were lost.

America is poised to gain jobs for the 80th consecutive month.

Still, the jobs report produces several different measures of unemployment.

Even with the figures, economic growth is likely to rebound this quarter and the United States is near full employment, helping explain why Federal Reserve policy makers are expected to raise interest rates when they meet on 13-14 June. But they might well influence what happens next.

"The weak job growth number isn't a disaster because it still keeps up with population growth", Paul Diggle, senior economist at Aberdeen Asset Management, told Reuters.

The Labor Department said Friday that the jobless rate fell to 4.3 percent the lowest level since 2001, from 4.4 percent. It has dropped five-tenths of a per centage point this year. But the rate declined mainly because people stopped looking for work last month and so were no longer counted as unemployed. "With the unemployment rate dropping to 4.3 percent, it really can't get much better", said Brian Kropp, human resources practice leader at the consulting firm CEB, now part of Gartner.

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. Economists expect the Fed will raise interest rates by 25 basis points at its June 13-14 policy meeting.

The May figures indicate the USA economy remains strong, and suggest a likely increase in the Federal Reserve's benchmark rate, later in June. A Reuters survey of banks that do business directly with the Fed, conducted after the employment report, showed all 18 primary dealers polled expected the US central bank to raise rates this month. However analysts say the U.S. stands to gain more by participating in the development of renewable energy.

More news: EU President warns Trump against Paris climate deal exit

The US central bank raised interest rates by 25 basis points in March. Data on consumer spending and manufacturing have offered hope that growth picked up early in the second quarter after gross domestic product increased at a tepid 1.2 percent annualized rate at the start of the year.

Average hourly earnings, a closely-watched metric, rose 0.2% during the month, as expected, putting year-over-year wage gains at 2.5%.

In May 1.5 million people were marginally attached to the labor force, down by 238,000 from a year earlier. However, hiring rebounded later in the summer and the job market regained its footing.

Cooler hiring may partly reflect the challenge of finding skilled and experienced workers amid a tightening job market. The labor force - everyone who is either working or actively looking for work - shrank by more than 400,000 people, and there were actually 233,000 fewer people working in May than in April.

Economists had expected job gains of about 185,000 in May. Hiring fell for the fourth straight month among traditional retailers that continue to lose ground to Internet rivals.

Job creation in the healthcare sector continued, with 24,000 new positions added.

Construction payrolls rose 11,000 last month.

Among the unemployed, the government said the number of job losers and people who completed temporary jobs declined by 211,000 to 3.3 million in May. Moreover, some slowdown in hiring was probably inevitable as the unemployment rate falls and the pool of available workers begins to dry up.

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