Friday's U.S. jobs report for May likely to show steady gains

Reversing an nearly two-year long trend in which the number of people looking for work had inched up, the labor force participation rate dropped by 0.2 percent in May, a discouraging note in a less than robust monthly report on unemployment. The unemployment rate slipped to 4.3% from 4.4%, touching the lowest level since 2001.

The Federal Reserve is widely expected to raise interest rates later this month but Friday's numbers may muddy the waters given the mixed picture it presents.

A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, fell two-tenths of a per centage point to 8.4 per cent, the lowest since November 2007. "Not only did payroll growth, at 138,000, come in well below expectations; but job growth in the previous two months was revised downward substantially". Since January, the unemployment rate has declined by 0.5 percentage point, and the number of unemployed has decreased by 774,000. Wage growth, however, has remained weak and the number of people in part-time work has remained high. Many analysts expect the economy to grow at a healthy 3% annual rate in the current quarter after meager 1.2% growth the first three months of the year.

The bigger picture is that the jobless rate has fallen by 0.5 percent since the start of the year, with many employers having difficulty finding qualified workers.

Wages in May increased 2.5 percent from the year before, in line with the moderate growth they've shown in recent months. Hospitals added 7,000 jobs over the month, and employment in ambulatory health care services continued to trend up (+13,000). The number of discouraged workers was 355,000, falling for the fourth straight month. As recently as 2015, job growth averaged 226,000 a month. Manufacturing lost 1,000 jobs and construction gained 11,000 new employees.

"While the message was a little muddied today, the evidence generally suggests the labor market is cyclically tightening, and the Fed will need to continue to lean against that", said Michael Feroli, an economist at JPMorgan in NY.

Walmart Testing Associate Delivery Program
The retailer assigns deliveries to associates in a way created to minimize the distance they collectively need to travel. The Walmart e-commerce testing program is designed in a way that can cut out the costs of the last mile distribution.

For the 12 months ended May 31, wages have risen 2.5 percent.

"After more than 130 days in office, President Trump has yet to show us he is serious about creating jobs and raising wages across the country", said Sen.

Douglas Holtz-Eakin, head of the American Action Forum, said that while the unemployment rate fell, the report's household survey showed that employment fell by 233,000.

Job gains in March were revised down to 50,000 from 79,000 while April's figures were also lowered to 174,000 from 211,000.

But payrolls increased by just 138,000.

Fed officials indicated last week a June rate hike is likely and Wall Street investors predict there's a 91% chance of a rate increase later this month.

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