The FINANCIAL — U.S. employers ramped up hiring last month and wage gains accelerated, suggesting the labor market is picking up momentum after slowing in the early months of 2015, according to Nasdaq.
Nonfarm payrolls rose a seasonally adjusted 280,000 in May, the Labor Department said on June 5, led by gains in professional and business services, leisure and hospitality and healthcare.
Revisions showed employers added 221,000 jobs in April, down from an initially reported 223,000. March’s payroll gain of 119,000 was revised up from a previously reported 85,000.
The unemployment rate, which is obtained from a separate survey of U.S. households, was 5.5% in May, up slightly from 5.4% the prior month.
Economists surveyed by The Wall Street Journal had predicted payrolls would rise by 225,000 in May and the unemployment rate would hold steady at 5.4%.
Wages, meanwhile, rose at a healthy pace. Average hourly earnings of private sector workers rose by 8 cents, or 0.3%, to $24.96 in May. Economists had expected a 0.2% increase in wages from April.
From a year earlier, hourly earnings rose 2.3% in May, a little better than the 2% annual pace of recent years.
The May report is an initial estimate and is likely to be revised as the government collects fresher data. But for now the report suggests employers continue to invest in new hires despite a recent string of mixed economic data.
Severe winter weather, a stronger dollar and a labor dispute that snarled activity at West Coast shipping ports all held back growth in the first quarter. Gross domestic product shrank by a 0.7% annual rate from January to March, the Commerce Department said last week.
The first-quarter slowdown is reminiscent of the first quarter of 2014, when U.S. economic output contracted before rebounding strongly in the spring and summer.
Many economists think the first quarter woes were temporary and that the economy will rebound this spring. Federal Reserve officials predict a bounce back, and most have said they expect to begin raising the central bank’s benchmark short-term interest rate from near zero later this year.
But Federal Reserve Governor Daniel Tarullo on June 4 said the U.S. economy appears to have “lost some momentum” and may not recover as quickly from the rough first quarter as it did in 2014.
“There are more questions at this point in 2015 than there were at this point in 2014,” Mr. Tarullo said at a conference in New York.
The International Monetary Fund also slashed its forecasts for U.S. economic growth Thursday, and called on the Fed to hold off on raising interest rates until 2016. The IMF now expects the U.S. economy to grow 2.5% this year, down from an earlier estimate of 3.1% in April.
The Fed has said that, assuming the labor market continues to improve, it will raise rates when officials are ” reasonably confident” that inflation will move back toward 2%. Many investors now expect the Fed to start raising rates in September.
Not all signs in Friday’s report pointed to strength in the labor market.
A broad measure of unemployment that includes Americans stuck in part-time jobs or too discouraged to look for work was unchanged in May at 10.8%.
The average workweek also remained the same last month, at 34.5 hours.
The share of Americans with jobs or looking for work remains historically weak. The labor-force participation rate ticked up to 62.9% from 62.8%, a sign of progress but still near the lowest level since the late 1970s.
In May, job growth was broad-based. Professional and business services added 63,000 jobs. Leisure and hospitality payrolls grew by 57,000. Healthcare, retail trade and construction also added positions. The mining sector, covering energy industries, fell by 17,000.
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