US unemployment rate hits 16-year low

Friday’s US jobs report for May likely to show steady gains

Friday’s US jobs report for May likely to show steady gains

This puts average job creation for the past three months at +120,667, this is well below where the three-month average stood last month due in no small part to the significant revisions for March and April. That rate dropped to 8.4 percent in May, and Cohn noted that it is down a full percentage point since Trump took office in January.

Unemployment in the USA dropped to 4.3% in May, the lowest since February 2001, despite slowing employment growth that may weigh on the Federal Reserve's consideration of another interest-rate hike in two weeks. Still, the rate declined mainly for a less-than-encouraging reason: People stopped looking for work in May and so were no longer counted as unemployed.

Wall Street had been expecting growth of 185,000 jobs.

Even with the figures, economic growth is likely to rebound this quarter and the USA is near full employment, helping explain why Federal Reserve policy makers are expected to raise interest rates when they meet on 13-14 June. The monthly jobs numbers can be volatile - and they are always revised. The April figure was revised down from an initially reported 211,000. Nonmanagement wages rose just 2.4 percent last month from a year earlier.

May was also helped by a very beneficial assumption. According to the ADP report released June 1, the USA gained 253,000 private sector jobs in May.

It's that guesstimate that made me predict that the job totals for May would be even better than the experts were estimating. Republicans' slow movement on both repealing and replacing ObamaCare and on enacting tax reform legislation is likely keeping jobs numbers a little on the low side.

"Companies may be taking a more cautious approach to hiring, not because they are anxious about sales, but because they are trying to assess whether the president and Congress will be successful in passing pro-growth policies", Behravesh wrote in a client note. The data are not seasonally adjusted.

Companies typically hire in spring for seasonal work and they did again this year.

"Disappointing", says Lynn Reaser, an economist at Point Loma Nazarene University in California.

If you've gotten this far you are probably wondering what this all means. It would mark the first time the Fed raised the rate twice in a calendar year since 2006. The volatile 16-24 age group accounted for much of the drop in the participation rate last month, suggesting a rebound is likely.

And that slowdown is coming off an already weak economy.

"Fed officials have noted the weakness in inflation numbers of the past few months but have been willing to discount it as temporary", said Michelle Meyer, senior USA economist at Bank of America Merrill Lynch.

The dollar hit a seven-month low against a basket of currencies on the diminishing rate hike prospects in the second half of the year. This has been hurting the economy. So far, that hasn't happened broadly across the economy. The Fed raised rates twice over the past six months.

As Ed Morrissey notes, all this looks more like an economy that is starting to stagnate rather than one that is ready to start growing rapidly.

As does every administration, President Trump's labor department hailed the report for its pluses and tried to point as many positives as possible.

Numerous jobs that have been added over the past year are in the generally lower-paying leisure and hospitality industry - hotels, restaurants and amusement parks.

But the influx of job seekers can also inflict a drag on pay growth.

There are plenty of explanations for the weaker-than-expected May jobs report, but the big picture is clear: The U.S. labor market has lost some of its mojo.

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