US employers add modest 138K jobs; job rate dips to 4.3 percent

Mark Zandi, chief economist at Moody's Analytics, estimates that monthly job growth above 80,000 or so should cause the unemployment rate to fall.

Traders now see a roughly 87 percent chance of a Fed rate increase on June 14, down slightly from 89 percent before the jobs report.

So far this year, the USA has added 810,000 jobs.

The unemployment rate, which is calculated from a different survey, fell from 4.4% to 4.3%, lowest since May 2003, the Labor Department said Friday.

According to the latest "Employment Outlook Survey", released by ManpowerGroup, employers expect the pace of hiring to continue picking up this quarter, with almost 25 percent planning to add staff through June.

Job gains are slowing as the labor market nears full employment.

The U.S. central bank raised interest rates by 25 basis points in March.

For metropolitan areas in April, the agency says, Ames, Iowa, and Boulder, Colo., had the lowest unemployment rates, at 1.7 percent and 1.8 percent, respectively.

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But most agreed that a hike would "soon be appropriate".

The mixed picture of the labor market could muddy the waters ahead of a Federal Reserve decision on interest rates later this month.

The Atlanta Fed is forecasting GDP increasing at a 4.0 percent pace in the second quarter. However, a persistent slack wage growth could cast a shadow on further monetary policy tightening. Average hourly earnings rose four cents or 0.2 per cent last month after a similar gain in April. That figure is well below the 3 or 4 percent growth typical of earlier economic recoveries and throws into question the understood relationship between unemployment and pay (as one drops, the other typically rises). Average hourly earning could, however, surprise on the low side because of a calendar quirk. The average workweek was flat at 34.4 hours. More part-timers are finding full-time work. They were expecting the report to show job gains of 185,000.

"The economy is starting to come back, and very, very rapidly", President Donald Trump said on Thursday, as he announced that the United States will withdraw from the Paris climate accord because it costs too much money and would kill millions of American jobs.

The Trump administration has designated the pace of hiring for good-paying skilled jobs in construction, manufacturing and mining as among the categories it monitors for economic health. This is emphasized by the fact that according to the Household Survey, the labor force dropped by 429,000, and the number of employed dropped by 233,000, these numbers, of course, are far larger than the number of jobs created for the month and suggest that a significant number of people simply gave up looking for work. That would still be at least twice as high as the number of new jobs the economy needs to just keep up with population growth - an indication that the USA labor market continues to tighten.

But payrolls increased by just 138,000.

Manufacturing employment fell by 1,000 jobs last month as payrolls in the automobile sector dropped 1,500 amid falling sales.

"What people have to ask themselves is what matters more to the Fed at this point, what happens from a job gains perspective and what happens from a resource utilization measure perspective".

(Copyright © 2015. All Rights Reserved.)
 
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