The U.S. economy added 138,000 new jobs in May, according to the jobs report released by the Bureau of Labor Statistics Friday.
The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, could have risen last month as college graduates enter the labor force.
Average hourly earnings rose 0.2 percent for the month, and are up 2.5 percent for the year, but this more or less keeps pace with inflation, with the Consumer Price Index for urban consumers also up 2.2 percent over the 12-month period. March's was revised to 50,000 from 79,000, and April's to 174,000 from 211,000. Over the past year, employers have added an average of 181,000 jobs per month. Over the past three months, employers have added an average of 121,000 jobs each month, compared to an average of 201,000 jobs per month in the three months prior. Nonmanagement wages rose just 2.4 percent last month from a year earlier.
Retail trade lost 6,100 jobs, and the majority were in large department stores.
Economists had expected nonfarm payrolls to grow by 145,000 with an unemployment rate of 4.4 percent.
Government employment decreased 9,000 last month.
But unlike in March, when weak job growth was accompanied by a growing labor force, May's report was disappointing across the board. Even so, with the revisions, the three-month average of payroll gains was the weakest since 2012. This means despite gains in employment, the additional number of job-seekers in the country is rising faster than the number of jobs created.
Maibach said hourly wages have increased only a bit, but some workers are earning 10 percent to 25 percent more a week as the company takes on more work. 608,000 people dropped out of the labor force between April and May. "But the slowing pace of job growth combined with still-muted wage growth may lead some officials to downgrade their expectations for further policy tightening in the second half of the year".
"Through the volatility, we believe the trend in employment growth remains more than strong enough to keep unemployment trending down and the trend in wage gains upward", he said in a research note.
Low productivity growth and the relatively low skill level of many American workers who are getting pulled into the labor market are likely holding back a more rapid increase in wages, Swonk said.
The unemployment rate is expected to have remained in May at 4.4 percent, a low figure that historically has reflected a healthy job market.
Most analysts still expect the Fed to increase the benchmark lending rate later this month, but expectations for another increase in September could be in doubt.
Construction companies increased their payrolls by 11,000 in May after shedding 1,000 positions the previous month. The highest rate was in the Cleveland, Ohio, area, at 5.4 percent.
To some economists, these trends suggest that the economy is already well on its way to providing some kind of a job for almost all Americans who are willing and able to work.
"Fed officials have noted the weakness in inflation numbers of the past few months but have been willing to discount it as temporary", said Michelle Meyer, senior USA economist at Bank of America Merrill Lynch. "The lack of more substantial inflation also argues against a future trajectory of aggressive rate hikes".