The U.S. economy added a robust 223,000 jobs in the month of May, according to figures released Friday by the Department of Labor. The unemployment rate fell slightly to 3.8 percent. The numbers were eclipsed earlier Friday morning by a presidential tweet that breaks a federal rule.
Wage growth remained a sticking point in the mainly positive jobs report, with hourly pay up by only 2.7 percent year on year. But with inflation at just over 2 percent, workers are barely feeling any net increase. The current wage growth rate is almost half what would be expected with an unemployment rate this low.
The Federal Reserve, which next meets on June 12-13, has been confounded by the lack of wage growth and will be closely watching the May number in order to weigh options for inflationary measures. The Fed noted this week that "wage increases remained modest in most Districts,” but it still likely to approve an increase in its benchmark interest rate at the June meeting of its Federal Open Market Committee.
“One of the ways wages move up in aggregate is people change jobs,” Lewis Alexander, chief U.S. economist at Nomura, told CNBC. "Labor market turnover is low — the turnover matters.”
President Donald Trump, who likely saw the monthly report from the Bureau of Labor Statistics last night, gave an early hint of the positive numbers in a tweet Friday morning ahead of the official announcement.
It is not customary for a president to make mention of the crucial figures in advance, as such action could send signals to the market.
With such low unemployment, one might expect the pace of hiring to dampen as the workforce grows and all available jobs get filled — but May’s figures are a firm indication that the economy remains locked in a record growth streak, with companies clearly still adding jobs for the 92nd straight month.
Wall Street was buoyant Friday morning, with the Dow Jones set to open on a triple-digit gain. Investors were still digesting Thursday’s shot across the bow by the Trump administration’s trade team, after Commerce Secretary Wilbur Ross announced the U.S. would be slapping tariffs on steel and aluminum imports from three of its closest trading partners, the EU, Mexico, and Canada.