WASHINGTON: The U.S. economy added fewer jobs in May, but the unemployment rate dropped to 4.7 percent, the lowest level since November 2007.
The total nonfarm payroll employment increased by only 38,000 in May, the weakest performance since September 2010, said the Labor Department here the other day.
In addition, the Labor Department revised down the job increases in March and April, with the combined job gains in these two months at 59,000, less than previously reported.
The labor force participation rate, the share of the working-age population employed or looking for a job, went down to 62.6 percent. The rate has declined by 0.4 percentage point over the past two months, offsetting gains in the first quarter.
Average hourly earnings for all employees increased 5 cents to 25.59 U.S. dollars, following an increase of 9 cents in April. The average hourly earnings have risen by 2.5 percent year on year, the same growth rate in April.
Volatility in monthly data and a temporary strike in the telecommunications industry contributed to the disappointingly low job gains, said Jason Furman, chairman of the Council of Economic Advisers under the White House, on Friday.
In light of both volatility and temporary factors in monthly job data, it’s important to view May’s report in the context of both other recent data, including recent improvements in consumer spending, vehicle and housing sales, and initial claims for unemployment insurance, Furman added.
However, Friday’s weak job report may raise the bar for the next interest rate hike by the Federal Reserve. U.S. Fed governor Daniel Tarullo said on Thursday that he was inclined to a prudent approach in raising interest rate, as “it’s not clear what full employment is and we’re in a global environment which is not inflationary.”
The U.S. Fed has kept the benchmark short-term interest rates unchanged after it raised the rate in December. Fed officials have forecast two more rate hikes for this year.
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.
