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

That’s always a strong possibility when you’re talking about something as volatile as the jobs numbers.

The odds of a June hike dropped 2.1 percentage points, based on trading in interest-rate futures analyzed by Bloomberg, but remained high at 86.3%. The highest rate was in the Cleveland, Ohio, area, at 5.4 percent.

Among the unemployed, the government said the number of job losers and people who completed temporary jobs declined by 211,000 to 3.3 million in May.

Even so, some segments of the economy that affect commercial space absorption still did reasonably well in terms of job creation.

The unemployment rate declined to 4.3%, its lowest level during this economic expansion, though it was driven by a sequential decline in labor force participation to 62.7% from April’s 62.9%. U6 fell 0.2 points in May to 8.4 percent.

The past two months of job growth were also lower than originally reported, with March revised down to just 50,000 jobs added and April down to 174,000. In May, job gains occurred in health care and mining. While minimum-wage increases in many states have pushed pay up in those sectors, employment growth in those fields drags on overall wage gains.

Job growth in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities and government, showed little change over the month. As recently as 2015, job growth averaged 226,000 a month.

The low job numbers from the BLS contrast greatly with those from the payroll services firm ADP Inc.

In May, employment in professional and business services continued to trend up (+38,000). Factories reduced their payrolls by 1,000 in May after adding 11,000 net new jobs the previous month. Today’s report revised down the estimates for new jobs in March and April, by 66,000 altogether.

Nearly 140,000 jobs were added last month, but that’s shy of predictions. The new jobs were on pace with the 24,600 jobs created in April.

The labor market was largely expected to return to form last month after volatile weather made for sharp gyrations the first five months of the year. The Labor Department will release its closely watched employment report on Friday, less than two weeks before the Federal Reserve’s June 13-14 policy meeting.

Average hourly earnings were $26.22 last month, rising 2.5% over the year.

Maibach said hourly wages have increased only a bit, but some workers are earning 10 percent to 25 percent more a week as the company takes on more work.

The historically low unemployment rate likely gives the Fed leeway to increase the central bank’s benchmark interest rate this month.

That’d never be good, but it’d be particularly bad when we still have so many people who should be in the prime of their working years who are not, in fact, working.

Economists surveyed by Reuters expected nonfarm payrolls to grow by 185,000 and the unemployment rate to hold steady at 4.4 percent.