United States: U.S. jobs creation the weakest since 2010
June 3, 2016
Non-farm payrolls grew by 38,000 in May, which came in well below April’s downwardly revised increase of 123,000 (previously reported: +160,000) and well short of the 160,000 gain that the markets had expected. The result represented the weakest job creation in the U.S. since September 2010 and came in ahead of the June FOMC meeting scheduled for 14-15 June. The strengthening of the labor market recovery has been at the heart of the Fed’s policy for higher interest rates and the result of a single report is not likely to force the U.S. Central Bank completely to ditch its assessment of the economy.
The private sector added 25,000 new jobs. The public sector added an additional 13,000 jobs, which recovered part of the 7,000 jobs lost in the previous month. The overall payroll figures in May were mainly affected by a strike of some 35,000 employees at Verizon Communications that began in April and stretched to May. Nonetheless, analysts said that despite this effect, the jobs report was poor.
The unemployment rate, which is derived from a different survey, fell substantially from April’s 5.0% to 4.7% in May, which marked the lowest rate since November 2007. However, the sharp fall in the unemployment rate was the result of workers quitting the labor force rather than buoyant hiring. The participation fell from 62.8% in April to 62.6% in May, which is the lowest participation rate seen so far this year.
Author: Ricardo Aceves, Senior Economist