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Unemployment Continues To Fall Below April's Record Rates

Unemployment Continues To Fall Below April's Record Rates

After striking record lows in April, U.S. unemployment continued to drop in May.

What Happened

The Labor Department recorded a rate of just 3.8 percent against a 3.9-percent estimate.

Nonfarm payrolls expanded 223,000, far exceeding a 189,000 forecast as well as last month’s addition of 164,000 jobs.

Why It’s Important

Last month, the market responded favorably to the first sub-4-percent unemployment rate in over a decade. The figure has rarely been seen in American history, appearing in just six months over 40 years.

Experts suggested the measured economic improvement could inspire further tightening of the Federal Reserve’s interest rate.

Last month, economist Mohamed El-Erian said the lower unemployment rate could eventually manifest in higher individual earnings.

"With slack continuing to be taken out of the labor market, the prospects are for higher wage growth in the remainder of the year," El-Erian told Benzinga.

What’s Next

Data from the Bureau of Labor Statistics reveals no trend in unemployment rates beneath the 4-percent threshold. History shows the second consecutive month of sub-4-percent rates could be followed by continued declines, sustained levels or even jumps as wide as 0.4 percentage points.

Some analysts, including Bankrate’s Mark Hamrick, predict a 3.5-percent rate “at some point, as long as the U.S. economy can generate 150,000 or more jobs each month.” Trade wars could impact future growth.

A Bankrate survey also recorded widespread expectations for a recession.

Related Links:

Tax Reform Is Boosting Wages And Bonuses, But Some Corporations Are Still Cutting Jobs

March Non-Farm Payrolls Trail Expectations; Economist Sees Healthy Normalization


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