Employment in the U.S. increased by much less than expected in the month of May, according to a report released by the Labor Department on Friday.
The report said non-farm payroll employment rose by 138,000 jobs in May after climbing by a downwardly revised 174,000 jobs in April.
Economists had expected an increase of about 185,000 jobs compared to the jump of 211,000 jobs originally reported for the previous month.
Increases in employment in the professional and business services, healthcare and social assistance and construction sectors were partly off by drops in manufacturing, retail, and government jobs.
Despite the weaker than expected job growth, the unemployment rate edged down to 4.3 percent in May from 4.4 percent in April. The unemployment rate had been expected to come in unchanged.
With the unexpected decrease, the unemployment rate fell to its lowest level since hitting a matching rate in May of 2001.
However, the report showed the drop in the unemployment rate primarily reflected a notable decline in the size of the labor force.
The labor force tumbled by 429,000 people in May, while the household survey of employment showed a decrease of 233,000 people.
Even with the disappointing job growth, analysts have suggested the Federal Reserve is still likely to raise interest rates later this month.
"It would have taken a horrendous report today to make the Fed think twice about a June rate hike," said James Smith, developed markets economist at ING. "Other recent data has supported the notion that 1Q economic weakness was 'transitory.'"
The report also said average hourly employee earnings rose 0.2 percent in May and were up 2.5 percent year-over-year, unchanged from the previous month.
by RTT Staff Writer
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