After a slow start to the year amid frigid temperatures followed by a spring catch-up in March and April, the U.S. economy settled into a healthy, if not spectacular, pace of job creation last month, adding 217,000 positions. The unemployment rate was unchanged at 6.3 percent.
The Friday report by the Labor Department had been eagerly awaited by investors and traders - with some pessimists fearing a return to the weak level of job creation recorded in December and January, and optimists hoping for a repeat of April’s outsize payrolls gain of 282,000.
In the end, the May number was almost exactly in line with economists’ consensus in recent days. While the flat unemployment rate might be considered good news after a big drop in April to a 5 1/2-year low, one cautionary signal was that the percentage of Americans in the workforce did not budge, either.
At 62.8 percent, the labor participation rate remains at lows not seen since the late 1970s, a sign that many Americans have given up the search for work entirely and remain wary about their prospects of getting a job, not even bothering to look for one.
Still, the pace of job creation in May is a bit above the average gain of just under 200,000 jobs a month over the past year. For the fourth month in a row, employers added more than 200,000 positions, the first time that has happened in 14 years, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“This is a solid report,” Shepherdson said in a note to investors immediately after the jobs announcement Friday. The lack of wage growth, he added, should calm any fears at the Federal Reserve that the gradually improving labor market will quickly create upward pressure on inflation, always a worry for central bankers.
Indeed, experts said that the latest report should keep the Fed on its current path of gradually reducing stimulus efforts in the form of monthly bond purchases, set to wrap up in the fall, while not beginning to increase short-term interest rates until the middle of 2015.
Over the last six months, employers have added an average of just over 200,000 people a month to their payrolls, with momentum rising recently after more anemic job gains in December and January. Average hourly earnings in May rose 5 cents, to $24.38, and are up 2.1 percent over the last 12 months.
The May figures do represent something of a landmark: Almost exactly five years into the recovery, total payrolls have finally surpassed where they were before the recession.
While the addition of nearly 9 million jobs since hiring bottomed out in February 2010 is certainly good news, the number is still far from what is necessary to accommodate new graduates and millions of others who have entered the workforce since payrolls last peaked in January 2008 at 138,365,000 jobs.
Private payrolls, which do not include public-sector workers at the federal, state and local levels, surpassed their prerecession level in March.