US job growth spurts, wages rise
Print Edition
US job growth accelerated sharply in May and wages picked up, signs of momentum in the economy that could put a September interest rate hike from the Federal Reserve back on the table.
Nonfarm payrolls increased 280,000 last month, the largest gain since December, the Labor Department said yesterday.
While the jobless rate rose to 5.5 percent from a near seven-year low of 5.4 percent in April that was because more people, likely new college graduates, entered the labor force, indicating confidence in the jobs market.
Payrolls for March and April were revised to show 32,000 more jobs created than previously reported. That together with an 8-US cent gain in average hourly earnings suggest a September rate hike is now a possibility.
The Fed has kept overnight rates near zero since December 2008. Officials from the US central bank will meet on June 16 to 17, but the economy’s sluggishness has left financial markets doubting whether the Fed will be able to raise rates this year.
US gross domestic product contracted at a 0.7 percent annual pace in the first quarter, although the drop probably exaggerated the economy’s weakness given a mix of temporary factors at play.
Even so, growth is off to a slow start in the second quarter, in part because of the lingering effects of a strong dollar and spending cuts in the energy sector.
Economists polled by Reuters had forecast payrolls rising 225,000 last month and the unemployment rate steady at 5.4 percent. May payroll gains lifted job growth above last year’s average of 260,000 jobs per month.
The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose 0.1 percentage points to 62.9 percent last month.
A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment was flat at 10.8 percent.
The increase in average hourly earnings took the year-on-year gain to 2.3 percent, the largest rise since August 2013.
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