Breakout AnalysisLower for the 5th straight month was mining and logging (-17k) which includes energy jobs affected by lower oil prices. The economic weakness this year has been often associated with inclement weather on the east coast and dock strikes on the west coast. The unemployment rate, actually ticked higher to 5.5% in May. The quirky nature of this number was affected by the fact that 400k more people entered the workforce which is nice to hear.
OutlookOn the other hand, the May labor force participation rate of 62.9% remains near historic lows and consistent with a range of 62.7% to 62.9% range experienced over the past year. An unemployment rate that includes discouraged and underemployed workers remained at 10.8%. Other important indicators were mixed with average workweek hours unchanged at 34.5 hours and annual wage growth of 2.3% that remained below the 3% level that most feel is best for the overall economy. Overall and on its own, this morning’s employment report was not robust in and of itself. When compared to recent economic developments, however, it was certainly good news especially when considering the economy actually contracted during the first three months (GDP down 0.7%).
The FedA key implication from this report is that it provides room for the US Federal Reserve Fed to raise short-term rates sometime soon.
There has probably not been enough time since the mentioned GDP contraction for the Fed to make a move at their next meeting this month but there is now a strong expectation that the September meeting may be the start date.Economic numbers that include three employment reports prior to that meeting will obviously receive careful consideration.
Photo credit: Diane Robinson via Flickr Creative Commons
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