US jobs report brightens economy's prospects

Friday 06 June 2014 13.38
US non-farm payrolls increased by 217,000 in May, new figures show
US non-farm payrolls increased by 217,000 in May, new figures show

US employers maintained a solid pace of hiring in May, returning employment to its pre-recession level and offering confirmation the economy has snapped back from a winter slump. 

Non-farm payrolls increased 217,000 last month, the Labor Department said today. 

Data for March and April was revised to show 6,000 fewer jobs created than previously reported.

Economists polled by Reuters had expected employment to increase 218,000 last month. 

Despite decelerating from April's strong 282,000 gain, when hiring was still bouncing back from a winter lull, May marked a fourth month in a row with job gains above 200,000 and an important milestone in the economy's recovery. 

It has finally recouped the 8.7 million jobs lost during the recession and employment has risen by 8.8 million since hitting a trough in February 2010. 

Today's figures show that average hourly earnings, which are being closely watched for signs of how fast labour market slack is easing, rose five cents last month. 

The pace of hiring adds to data ranging from car sales to services and factory sector activity that have suggested growth this quarter will top a 3% annual pace. 

The economy contracted at a 1% rate in the first quarter, dragged down by unusually harsh winter weather and a slow pace of inventory building by businesses. 

The US unemployment rate held steady at a five and a half year low of 6.3% even as some Americans who had given up the search for work resumed the hunt. That was because there was an increase in household employment. 

Economists expect more previously discouraged workers to re-enter the labour force during the rest of the year. While that would be a sign of confidence in the labour market, it could slow the decline in the jobless rate. 

The return of discouraged job seekers would be welcomed by the Federal Reserve, which has cited low labour force participation as one of the reasons for maintaining an extraordinarily easy monetary policy. 

The labour force increased by 192,000 people in May after declining sharply the prior month. That left the labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job unchanged at 62.8%. 

May employment gains were broad-based. Manufacturing employment increased by 10,000, expanding for the 10th month in a row. Further increases are expected as car sales outpace inventories. US construction payrolls rose by 6,000 - the fifth consecutive month of gains, but the pace of growth slowed. 

There were sturdy job gains in leisure and hospitality, and professional and businesses services, as well as  healthcare. Government payrolls increased 1,000, the fourth month of gains. Retail employment also rose last month.