US non-farm payrolls rise by 138,000 in May
By Alexander Bueso
Date: Friday 02 Jun 2017
(ShareCast News) - Job creation in the States slowed last month, surprising economic forecasters.
US non-farm payrolls increased by just 138,000, undershooting economists' forecasts for an increase of 171,000.
In tandem, estimates for the previous two months were cut by a combined 66,000.
By sectors, the biggest slowdown in hiring was seen on the services side of the economy, as healthcare (down from 44,900 to 32,300) and leisure and hospitality (down from 58,000 to 31,000) firms took on fewer staff.
America's rate of unemployment did continue falling lower, dropping from 4.4% for April to 4.3% in May, but partly because fewer people were looking for work.
Thus, the labour force participation rate slipped by two tenths of a percentage point to 62.7% as the civilian labour force shrank by 429,000.
That was the result of a drop in both the number of unemployed which fell by 195,000 to 6.861m and a 233,000 person decline in the ranks of those employed to 152.9m.
Nonetheless, Paul Ashworth, chief US economist at Capital Economics, did not appear too bothered by falling participation, telling clients: "Don't read too much into the May figures specifically, however, as those declines follow a long sequence of big monthly gains."
Average hourly earnings increased by 0.2% month-on-month, as expected.
In comparison to a year-ago, earnings grew by 2.5% versus a 2.7% rise in April.
"The dollar dived and US Treasury yields sank after the snapshot of the US labour market left investors disappointed. This was a soft nonfarms number, enough to make investors cautious but hardly enough to change immediate projections for the path of rates. It does look like the kneejerk is a bit overdone considering where we were with the dollar and yields already.
"It certainly bodes well for equities as we enter this 'Goldilocks' phase of solid growth, steady and unspectacular inflation and accommodative monetary policy," said Neil Wilson, senior market analyst at ETX Capital.
As of 1404 BST, the US dollar spot index was at its lows of the session, trading lower by 0.38% at 96.82, while the yield on the benchmark 10-year US Treasury note was to be found at 2.18%, off an intraday high of 2.22%.
-- More to follow --
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