Non-Farm Payrolls Beat Expectations But Unemployment Rate Ticks Up Unexpectedly as Labor Force Grows
Total nonfarm payroll employment increased by 175 thousand in May, and the unemployment rate was essentially unchanged at 7.6 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, food services and drinking places, and retail trade.
The economy added 175 thousand jobs in May, higher than the consensus economist forecast of 165 thousand. However, April's figure revised lower to 149 thousand from 165 thousand. The unemployment rate ticked up in the month unexpectedly to 7.6 percent from 7.5 percent as economists were looking for a flat reading.
Private sector payrolls climbed 178 thousand in the month, beating the consensus economist estimate by three thousand jobs, although the prior figure was revised much lower to 157 thousand jobs added from 176 thousand. Also, following the weaker than expected ISM Manufacturing Index earlier this week, manufacturing payrolls declined 8 thousand jobs in May, well below the expected gain of 4 thousand jobs with April's figure revised lower to a decline of 9 thousand jobs from flat initially.
Temporary Worker Gains
The BLS noted, "professional and business services added 57,000 jobs in May. Within this industry, employment continued to trend up in temporary help services (+26,000), computer systems design and related services (+6,000), and architectural and engineering services (+5,000). Employment in professional and business services has grown by 589,000 over the past year."
"Retail trade employment increased by 28,000 in May. The industry added an average of 20,000 jobs per month over the prior 12 months. In May, general merchandise stores continued to add jobs (+10,000)."
The BLS did note that government payrolls have declined in recent months as the sequester begins to hit employment. Federal government employment declined by 14 thousand jobs in May. Over the past three months, federal government employment has decreased by 45 thousand jobs. Recall, the sequester began to take effect in April.
Labor Force Growth
The labor force increased by 420 thousand people in May as some discouraged workers began looking for jobs again. However, this figure could also be skewed by graduating college students who are now looking for jobs.
The increase in the unemployment is largely attributable to the increase in the labor force, the denominator of the rate. Although employment increased, the labor force grew faster and thus contributed to the rise in the unemployment rate.
S&P 500 futures jumped nearly 12 points on the news and were higher by 3 points for the session at 1,631.50. The dollar also saw some gains on the news with the USD/JPY rising from a 2-month low to 96.40 and the EUR/USD fell about 70 pips to 1.3227.
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