The BLS released the Employment Situation report for May. Payroll employment increased by 138 thousand, and the prior two months were revised downward by a total of 66 thousand. The unemployment rate fell to 4.3% from 4.4% in April, but only because the number of people in the labor force declined faster than the number of people employed in the household survey. The labor force participation rate slipped to 62.7% from 62.9%.
The May numbers are a little disappointing but nothing more. Monthly payroll gains in the first five months of the year have averaged 162 thousand, slightly ahead of the 157 thousand in the same period of 2016. Recent movements in the unemployment rate have been largely driven by gains and losses in the labor force, which have been inconsistent in the (smaller sample) household survey, as reflected in the labor force participation rate which has trended flat for several years.
Today’s report is unlikely to alter impressions of the trajectory of the economy at the Federal Reserve. Analysts are expecting another 25 basis point increase at the meeting of the Federal Open Market Committee (FOMC) later this month.