The U.S. economy had a net gain of 38,000 jobs in the month of May. The number was much lower than expected and is the smallest gain since 2010.
The growth was lower than April’s 123,000 and the rough average of 200,000 jobs added that the economy has been adding for the past several months. The unemployment rate fell to 4.7%, however that was largely because of Americans leaving the workforce, so it is not a positive decrease.
There is also more to the numbers than meets the eye. Roughly 36,000 Verizon employees have been striking throughout the month of May and did not report to work. They were counted as unemployed for the purpose of calculating net gain/loss. In addition, the unemployment rate under 5% means that the economy is at what economists call “full employment.” As a result, it was expected that job growth would slow.
While wage growth is typically a point of concern in the monthly report, it was a bright spot in an otherwise disappointing report. Growth was 2.5%, although the Federal Reserve sees 3.5% growth as the ideal level.
Many are now watching the Federal Reserve to see what action it will take. Many analysts believed the Fed would propose an interest rate hike in June after the months of strong economic growth, but those expectations have changed as a result of May’s numbers.