US job market looks solid 8 years after recession ended

Friday's US jobs report for May likely to show steady gains

The U.S. generated a modest 138,000 new jobs in May and employment growth earlier in the spring was weaker than initially reported, adding to evidence that a tight labor market is making it harder for companies to fill open jobs.

Job gains for the most recent month occurred in health care and mining. Average wages rose 0.2% to $26.22 an hour, the government said Friday.

"Job growth is a little disappointing, but enough to continue tightening the labor market", said Michael Feroli, chief USA economist at JPMorgan Chase & Co.in NY. For those who think the economy is close to capacity, last month's gains were solid. In May this number stood at 8.4%, down from 8.6% in April.

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

Stock futures on Wall Street trimmed gains slightly and were last trading little changed. Dow futures were up about 67 points, S&P 500 futures were up 5 points, and Nasdaq futures were up 18 points.

The unemployment rate slipped to 4.3% from 4.4%, touching the lowest level since 2001.

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The civilian labor force participation rate was 62.7%, a 0.2% decrease from April. The employment to population ratio also fell in May to 60% from 60.2% in April. Job growth in health care has averaged 22,000 per month thus far in 2017, compared with an average monthly gain of 32,000 in 2016. Over the past four months, non-store retailers (mostly online sellers) have added 12,500 jobs while the rest of the sector has cut 92,600.

"The loss of manufacturing jobs in May is a stark reminder of the challenges that face factory workers: declining auto sales, a persistently high goods trade deficit and muddled fiscal policies", said Alliance for American Manufacturing President Scott Paul. That's right in line with the monthly average of 174,000 over the past three months.

That would keep the year-on-year increase in wages at 2.5 percent.

"There is not going to be a big turnaround in wage growth until productivity picks up", said Andrew Chamberlain, chief economist at the jobs site Glassdoor.

The employment report came a day after Trump announced he was withdrawing the United States from the 2015 Paris climate agreement in a bid to preserve USA jobs. The smaller and more volatile survey of households also showed a drop in employment. The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged over the month at 1.7 million and accounted for 24.0 percent of the unemployed. Since 2006, real wages have fallen 7.4 percent. Given this quirk, however, expect a rebound in June. Following sizable revisions downward in the March and April jobs reports, it may be time to suggest that President Donald Trump's campaign promise to bring jobs back to the US has disappointed. Economists say the main reason is that the proportion of adults who either have a job or are looking or one has remained unusually low.

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