The U.S. said that its labor market added another 175,000 jobs last month, but its jobless rate edged higher to 7.6 percent as more Americans looked for work.
The job growth exceeded the expectation of most analysts. But economist Mark Vitner at the Wells Fargo bank said that many of the new jobs are in low-paying occupations, somewhat negating the favorable news.
“When you dig within the number you see that a very large proportion, nearly 60 percent of the jobs that were added, came in low-paying occupations, things like retail trade, leisure and hospitality, temporary staffing and home health care. And for that reason, they’re not likely to see a whole lot of income growth out of these numbers,” Vitner said.
The White House noted that the U.S. economy has now added jobs for 39 months in a row, including nearly a million this year.
But the country’s unemployment rate remains well above the country’s long-term 5.8 percent average, even though it is still near a 4.5 year low, before the country was hit with a sharp economic downturn.
Analysts are questioning how much the jobless rate might fall in the coming months as the country’s central bank, the Federal Reserve, decides whether to trim its massive support of the economy through large-scale bond purchases.
Vitner said the American economy seems to have slowed since April, down from the 2.4 percent advance in the first quarter of the year. “I think we’re going to be hard-pressed to get economic growth much above 2 percent in the second half of the year,” he stated.
Friday’s report said 11.8 million people were still looking for work in May, little changed from April, when the jobless rate was 7.5 percent.
The government said Friday that employment increased last month in professional and business services, restaurants and retail stores.
The country’s major stock indexes are at near record highs, but employers have been slow to start large-scale hiring. Some industries have grown, then stalled again. The country’s housing market has shown signs of recovering in recent weeks, and consumers have increased their spending this year.
A recent survey of about 1,100 key financial and management officers of companies across the country shows they are growing more optimistic and have more plans to expand.
But the survey of members of the American Institutes of CPAs shows only a slight increase in the number of firms that plan to boost hiring soon. CPA Jim Blake said economic growth is welcome, but will have to speed up before there is a surge in hiring.
“It’s going to take a lot more feeling that they are going to get a return on that investment before they open the flood gates,” Blake said. “When you look at the survey, they do have a question related to do you have enough manpower? Do you have enough people on staff? By and far, during the quarterly survey people said, ‘We are doing just fine.'”