WASHINGTON”•US unemployment fell to a 16-year low in May but monthly job creation has slowed sharply in the past three months, creating a mixed picture of the labor market.
The contrasting data could muddy the waters ahead of a Federal Reserve decision on interest rates later this month.
The economy added just 138,000 net new jobs in May, well below analyst expectations, and average job creation for the last three months slowed to 121,000, after the payrolls data for April and March were cut by a combined 66,000, the Labor Department reported Friday.
However, the jobless rate decreased by a tenth of a point to 4.3 percent.
But while that drop looks like good news, it also reflects the fact that some workers left the labor force, with the closely-watched labor force participation rate falling 0.2 points to 62.7 percent.
As it has done in recent months, the White House once again hailed the good news in the labor market.
White House Press Secretary Sean Spicer said the employment report showed “Americans seeking jobs are having more success finding them than at any point in the last 16 years.”
“There’s a lot of positive signs coming out of the job market,” he told reporters.
President Donald Trump has vowed to add 25 million new jobs to the economy over a decade, but economists say this goal is unrealistic and the latest data may bolster that view, especially with increasing reports that firms are struggling to fill open positions.
The employment report came a day after Trump announced he was withdrawing the United States from the 2015 Paris climate agreement in a bid to preserve US jobs.
However analysts say the US stands to gain more by participating in the development of renewable energy. One in every 50 new jobs added in the United States in 2016 was in the solar industry.
Jim O’Sullivan of High Frequency Economics was among those who said the weakness in job creation last month likely was due to volatility and distortions from seasonal adjustments applied to the data.
“Through the volatility, we believe the trend in employment growth remains more than strong enough to keep unemployment trending down and the trend in wage gains upward,” he said in a research note.
Most analysts still expect the Fed to increase the benchmark lending rate later this month, but expectations for another increase in September could be in doubt.