The U.S. labor market gave mixed signals in May, with a decline in the unemployment rate to a 16-year low contrasting with below-forecast hiring and wage growth, Labor Department figures showed Friday.
HIGHLIGHTS OF EMPLOYMENT (MAY)
Cooler hiring may partly reflect the challenge of finding skilled and experienced workers amid a tightening job market. It may also be a sign businesses are reluctant to expand their workforce until they see more evidence the new administration’s plans are translating into legislation that’ll reduce taxes and spur growth.
The decline in the unemployment rate — while a sign of a tightening job market — was also due to a drop in the size of the labor force, as the number of people classified as employed and unemployed fell by roughly the same amount.
Even with the figures, economic growth is likely to rebound this quarter and the U.S. is near full employment, helping explain why Federal Reserve policy makers are expected to raise interest rates when they meet June 13-14. Sustained hiring amid a shortage of skilled workers should eventually lead to an acceleration in wages.
One calendar quirk that may have depressed wage gains in May was that the 15th of the month — when workers who are paid semi-monthly get their checks — fell on the Monday after the survey week, which includes the 12th. This has distorted the wage readings in the past.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.