US unemployment rate hits 16-year low in May

The main issue, he said, was that the company couldn't keep its managers, leaving the firm with too few leaders to interview, hire and train associates.

US employers added 138,000 net new jobs to the rolls last month, below forecasts for 185,000 jobs, data from the Bureau of Labor Statistics showed Friday.

USA job growth slowed in May as a slide in the labor force participation rate helped pressure the nation's unemployment rate, suggesting the labor market is edging closer to full employment as doubts linger about the economy's growth trajectory in the second quarter. Once people stop looking for a job, they're no longer counted as unemployed.

Still, from a year earlier wages rose 2.5 percent, the same annual rate they have been stuck near since late 2015. Taken together, job growth has averaged just 121,000 over the past three months. While the topline unemployment number did fall and we also saw another drop in the broader U-6 unemployment rate, both of those drops seem to be attributable more to the fact that people were withdrawing from the labor force, likely a sign that the jobs market is fairly sparse out there right now.

The jobs report was the last major economic indicator to be released before Federal Reserve monetary policymakers gather in Washington on June 13 to decide whether to raise their key short-term interest rate.

Manufacturing employment fell by 1,000 jobs last month as payrolls in the automobile sector dropped 1,500 amid declining sales. Food services added 30,300 workers, while health care contributed 24,300 jobs. Factories reduced their payrolls by 1,000 in May after adding 11,000 net new jobs the previous month.

But governments, manufacturers and retailers lost workers.

But the retail industry has shed 50,000 jobs the past three months as brick-and-mortar stores shutter amid a seismic shift to online shopping.

When the unemployment rate was 4.4 percent in May 2007, wages for nonmanagerial workers were growing better than 4 percent annually. Few economists foresee another downturn looming, in part because the recovery from the recession has been steady but grinding, with little sign of the sort of overheated pressures that normally trigger a recession.

Economists had been expecting job gains of about 185,000, NPR's Yuki Noguchi reports, and to see the unemployment rate holding steady.

But the gains were enough to push the unemployment rate down to 4.3 percent - the lowest level since 2001. It's only when employers face a shallow pool of job applicants that they tend to feel compelled to raise pay in hopes of hiring people who fit their needs.

One reason could be that the top-line wage-growth numbers mask progress in stronger industries, he said.

In May average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.22. The amount of time people have spent unemployed, average wages, and weekly hours worked, also came from the BLS. Employment at all levels of government fell by 9,000 last month.

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