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US economy adds 280,000 jobs in May US economy adds 280,000 jobs in May
(35 minutes later)
The US economy added 280,000 jobs in May, more than analysts had predicted, the US Labor Department has said. The US economy added 280,000 jobs in May, the US Labor Department has said.
"Job gains occurred in professional and business services, leisure and hospitality, and health care," the statement said. The increase was more than analysts had expected and the biggest this year. Economists described it as "encouraging".
However the jobless rate, based on a different survey, crept up to 5.5% from 5.4% but this was explained by more people entering the labour force. The jobless rate, which is based on a different survey, crept up to 5.5% from 5.4%, but this was explained by more people looking for jobs.
Average earnings rose 0.3% to $24.96 a hour compared to the previous month. Average earnings rose 0.3% compared with the previous month, to $24.96 an hour.
On an annual basis that is a increase of 2.3%. This is a measure closely watched by policymakers as they assess when to start raising interest rates.
This is a measure closely watched by policy makers as they assess when to start raising interest rates.
Consistently higher wages, as well as the improving jobs market, will add to the argument for a rate increase, which most observers currently expect to happen in September, rather than at its next meeting in June.Consistently higher wages, as well as the improving jobs market, will add to the argument for a rate increase, which most observers currently expect to happen in September, rather than at its next meeting in June.
'Momentum' "More people working more hours and making more money is a very virtuous combination for growth," said Tom Simons from Jefferies.
"The May employment report is very encouraging."
Return to growth?
The economy is expected to return to growth in the second quarter, after an unexpected contraction in the first three months of the year.The economy is expected to return to growth in the second quarter, after an unexpected contraction in the first three months of the year.
It shrank by 0.7% between January and March but that was seen by many as an aberration, largely caused by an exceptionally harsh winter and a West Coast ports strike that severely damaged exports.It shrank by 0.7% between January and March but that was seen by many as an aberration, largely caused by an exceptionally harsh winter and a West Coast ports strike that severely damaged exports.
"While today's jobs report... substantially raises the likelihood of the Fed taking the first step towards normalising policy and hiking rates in September, the FOMC [Federal Open Markets Committee] will be watching the data keenly in coming months to seek reassurance that the economy is not losing too much momentum, with eyes on the impact of the strong dollar in particular," said Chris Williamson, chief economist at the research firm Markit. The Labor Department also revised the jobs figures from March and April. March was revised up to 119,000 from 85,000, while April was revised a touch lower to 221,000 from 223,000.
The Labor Department also revised the figures from March and April. March was revised up to 119,000 from 85,000 while April was revised a touch lower to 221,000 from 223,000. It means that over the past three months, companies have added an average of 207,000 jobs.
It means that over the past three months companies have added an average of 207,000 jobs. "Job gains occurred in professional and business services, leisure and hospitality, and health care," the Labor Department said.
Analysis: Michelle Fleury, New YorkAnalysis: Michelle Fleury, New York
The US labour market continues to heal.The US labour market continues to heal.
Jobs are being created and wages are rising. Even the slight increase in the unemployment rate can be seen as a positive sign - people are returning to the jobs market but not all are finding work. Jobs are being created and wages are rising. Even the slight increase in the unemployment rate can be seen as a positive sign - as more people are looking for work.
The labour participation rate - which counts those in employment or those who are looking - rose to 62.9% The labour participation rate - which counts those in employment or those who are looking - rose to 62.9%.
So is this jobs report strong enough to give the Federal Reserve - America's central bank - the green light to raise interest rates this year? They've been near zero for nearly seven years.So is this jobs report strong enough to give the Federal Reserve - America's central bank - the green light to raise interest rates this year? They've been near zero for nearly seven years.
Certainly the International Monetary Fund would like the Fed to wait until next year, when there is more of a rebound in wages and inflation.Certainly the International Monetary Fund would like the Fed to wait until next year, when there is more of a rebound in wages and inflation.
But after this Friday's jobs report, many on Wall Street now think the odds of a move in the second half of 2015 have just gone up.But after this Friday's jobs report, many on Wall Street now think the odds of a move in the second half of 2015 have just gone up.
Reaction
On Thursday, the International Monetary Fund advised the Federal Reserve to hold off raising interest rates until next year.
"Only 24 hours later, the IMF's suggestion that the Fed should wait until 2016 looks very dated,'' said Paul Ashworth from Capital Economics.
"At this stage, this evident strength in the labour market probably isn't enough to persuade the Fed to hike rates by July, but it definitely makes a rate cut by September probable.''
Chris Williamson, chief economist at the research firm Markit agreed that Friday's figures "raised the likelihood" of a rate increase in September. But he added that the central bank would "be watching the data keenly in coming months to seek reassurance that the economy is not losing too much momentum, with eyes on the impact of the strong dollar in particular".
The US government welcomed the report, but said it would not be complacent.
"Although the job market has made considerable progress throughout this recovery, challenges remain for our economy and there is more work to do," the statement said.