WASHINGTON—The latest jobs report – with 223,000 jobs gained May – revealed the lowest unemployment levels in nearly 50 years, but labor force participation continues to lag.
"The May jobs report was eye-catching with a surge in job growth, a drop in unemployment and an uptick in wage growth. Closer inspection shows some mitigating factors, however," noted NAFCU Chief Economist and Vice President of Research Curt Long. "Labor force participation fell for the third consecutive month, and much of the improvement in wage growth was concentrated among financial sector supervisors. But the Fed should be pleased all the way around as the report suggests a labor market that is performing well but not yet overheating."
The unemployment rate fell to 3.8% in May as 12,000 workers joined the labor force, noted Long.
The Federal Open Market Committee (FOMC) left the federal funds target rate at 1.5% to 1.75% during its meeting in March. The FOMC's next two-day monetary policy meeting is set for June 12-13.
In other report data, private-sector payroll employment increased 218,000 jobs during May. The goods-producing sector increased 47,000 jobs, while the service sector increased 171,000 jobs. Public sector employment increased 5,000 jobs from the prior month, Long said.
Average hourly earnings increased eight cents to $26.92 in May. Over the last 12 months, wages are up 2.7%. Since 2009, year-over-year wage growth has averaged just 2.3%.