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Slower hiring, lower unemployment offer mixed US labour signs

LiveMint logoLiveMint 02-06-2017 Shobhana Chandra

Washington: The US labour market gave mixed signals in May, with a decline in the unemployment rate to a 16-year low contrasting with below-forecast hiring and wage growth, labour department figures showed on Friday.

Cooler hiring may partly reflect the challenge of finding skilled and experienced workers amid a tightening job market.

It may also be a sign businesses are reluctant to expand their workforce until they see more evidence the new administration’s plans are translating into legislation that’ll reduce taxes and spur growth.

The decline in the unemployment rate—while a sign of a tightening job market— was also due to a drop in the size of the labour force, as the number of people classified as employed and unemployed fell by roughly the same amount.

Even with the figures, economic growth is likely to rebound this quarter and the US is near full employment, helping explain why Federal Reserve policy makers are expected to raise interest rates when they meet on 13-14 June.

Sustained hiring amid a shortage of skilled workers should eventually lead to an acceleration in wages.

One calendar quirk that may have depressed wage gains in May was that the 15th of the month—when workers who are paid semi-monthly get their checks—fell on the Monday after the survey week, which includes the 12th. This has distorted the wage readings in the past.

“I wouldn’t worry too much about monthly payrolls,” Jim O’Sullivan, chief US economist at High Frequency Economics in Valhalla, New York, said before the report.

“The labour market continues to be tight.” Jobless claims indicate “there’s no sign of any significant weakening in demand for labour”. Bloomberg

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