Economy Adds 138000 Jobs In May, Unemployment Rate Drops To 4.3 Percent

"Not only did payroll growth, at 138,000, come in well below expectations; but job growth in the previous two months was revised downward substantially".

While this was partly due to people dropping out of the workforce, the Bureau of Labor Statistics' broadest measure of unemployment, which includes workers in part-time jobs looking for full-time employment, dropped to 8.4pc from 8.6pc. Ford Motor Co said last month it planned to cut 1,400 salaried jobs in North America and Asia through voluntary early retirement and other financial incentives.

The president has focused on manufacturing jobs, a sector that has seen steady growth since his election. The Fed had been widely expected to raise rates at its meeting later this month in an effort to keep inflation in check as the economy improves. "But they might well influence what happens next", he said.

The unemployment rate fell to 4.3% from the prior month's 4.4% reading, with the caveat that the labor force shrank last month. "The Fed has been talking about this for over a year at this point and they are braced for that reality". Yet the decline stemmed more from people leaving the labor force than an increase in the number of people finding work. But Jim O'Sullivan, chief USA economist of High Frequency Economics, noted that seasonal adjustments can be especially tricky in May, prompting him to forecast just 140,000 employment gains.

For the year to date, the economy has added +810,000 new jobs, which means average job creation for the year so far now stands at 162,000 per month. The Fed is scheduled to hold its policy meeting on June 13-14. It increased its key interest rate in December and March. The dollar rose against a basket of currencies.

Even with the figures, economic growth is likely to rebound this quarter and the USA is near full employment, helping explain why Federal Reserve policy makers are expected to raise interest rates when they meet on 13-14 June.

The US central bank raised interest rates by 25 basis points in March. The Atlanta Fed is forecasting gross domestic product increasing at a 3.8 percent pace in the second quarter.

Trump delays moving US Embassy to Jerusalem for now
The office said that it still appreciated Trump's expression of friendship and promise to move the US embassy in the future. Trump's decision came hours after administration officials said he was considering pulling the USA out of NAFTA altogether.

Ten forecast further monetary policy tightening in September and only six saw a rate hike in December.

Wages in May increased 2.5 percent from the year before, in line with the moderate growth they've shown in recent months. In the past year, earnings have risen by 63 cents.

But with the labour market expected to hit full employment this year, there is optimism that wage growth will accelerate.

There are, however, fears that political scandals could derail the Trump administration's economic agenda.

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. Manufacturing lost 1,000 jobs and construction gained 11,000 new employees.

"A rate increase later this month is still nearly certain, but today's report may cause members of the FOMC to delay the shrinking of the Fed's balance sheet, which investors have priced in for later this year", he said.

But the last 12 months show no clear trend in the participation rate, according to the report. Retail employment fell 6,100, declining for a fourth straight month. Department store operators like JC Penney Co Inc, Macy's Inc and Abercrombie & Fitch are struggling against stiff competition from online retailers led by Amazon.

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