WASHINGTON • US hiring rose more than forecast in May, wages picked up and the unemployment rate matched the lowest in almost five decades, indicating the strong labour market will keep powering economic growth.
Payrolls increased by 223,000 following a revised 159,000 gain, Labour Department figures showed yesterday. The median estimate of analysts surveyed by Bloomberg called for 190,000 jobs.
Average hourly earnings increased 2.7 per cent from a year earlier, more than projected, while the jobless rate fell to 3.8 per cent from 3.9 per cent to match April 2000 as the lowest since 1969.
The report reinforces expectations for Fed policy makers to raise interest rates when they meet on June 12-13, and may spur bets on two more hikes this year after that, rather than one.
Steady hiring and lower taxes will bolster consumer spending, helping to support the projected rebound in US growth this quarter and continuing to trim the unemployment rate. Wage gains, while positive in the latest report, have yet to show sustained acceleration.
"Demand for labour remains pretty vigorous," said chief US economist Michael Feroli at JPMorgan Chase and Co in New York. "There isn't a whole lot to dislike in this report" other than the pace of hiring. He added: "This report, in and of itself, definitely strengthens the case for four hikes by the Fed this year."
The jobless rate fell further below Fed estimates of levels sustainable in the long run, a potential source of upward pressure on wages and inflation, according to some economists.
The fiscal boost from the Republican-backed tax cuts may also boost inflation at a time when the economy is near full employment, while a protracted trade war, sparked by Trump administration tariffs, would pose a growth risk.
Revisions to prior reports added a total of 15,000 jobs to payrolls in the previous two months, according to the figures, resulting in a three-month average of 179,000 - and a 2018 average of 203,000.
Economists estimate that monthly payroll gains of less than 100,000 are sufficient to keep pushing down the unemployment rate, which is derived from a separate Labour Department survey of households and is near levels considered consistent with at or below full employment.
The payroll gains last month were fairly broad-based, with construction adding 25,000 jobs and manufacturing adding 18,000. Service providers boosted employment by 171,000, led by increases in retail; education and health services; leisure and hospitality; and transportation and warehousing.
The number of employed people in the workforce rose by 293,000, the report showed, while the number of unemployed decreased by 281,000, helping push down the jobless rate.
BLOOMBERG
