‘Taken with the downward revisions, [report] suggests a continuation of the combination of slow GDP growth and weak productivity growth, emphasising the need for structural reforms in tax, regulatory, and entitlement policies.’ — Douglas Holtz-Eakin, American Action Forum
US companies created less new positions than expected last month, whereas the jobless rate dropped unexpectedly. The US Department of Labour reported on Friday that the US private sector added 138K new jobs to the economy in May, following the preceding month’s downwardly revised reading of 174K and falling behind expectations for a 181K gain, while the ADP Report showed Thursday that private payrolls rose 253K in May. Meanwhile, the unemployment rate dropped unexpectedly to 4.3% during the same month, while analysts expected the rate to remain unchanged at 4.4% last month. The jobless rate fall was mainly driven by the nation’s drop in the labour force participation rate to 62.7%, the lowest since May 2001. Apart from that, average hourly earnings climbed 0.2% in May, in line with analysts’ forecasts. In the meantime, April’s increase of 0.3% was revised down to a 0.2% gain. Despite Friday’s weak figures, the odds for a rate hike in June remained high at 93.5%. However, some analysts suggested that if inflation growth remains unstable it would be hard for the Federal Reserve to continue raising rates.
