According to the Department of Labor, the U.S. unemployment rate dropped to its lowest level in 16 years in May due to slower but steady hiring.
During May, the economy added a net 138,000 jobs. The number was down from recent trends, but steady enough to reduce unemployment. Even so, March and April delivered weaker job growth than previously thought. An average of 121,000 jobs were created by the economy in March, April and May, approximately two-thirds of the average monthly job growth in 2016.
The unemployment rate reached its lowest level since May 2001, dropping a tenth of a percentage point to 4.3 percent. Experts note that the labor force contracted, and that the drop could indicate that the labor market is at or above full employment.
The labor participation rate—which calculates the share of Americans holding jobs or actively looking for employment—dipped two-tenths of a percentage point to 62.7 percent, coming in a little above the level from a year ago and staying near four-decade lows.
In the first five months of 2016, workers in the private sector have seen increases in their paychecks of 2.5 percent, on average. Improved wages and the recent slow in inflation will add to the amount of money Americans have available to spend.
The “U-6” rate—a broader measure of unemployment that counts unemployed workers in the labor force as well as those too discouraged to search for jobs and part-time workers who would prefer full-time work—fell to 8.4 percent in May from 8.6 percent in April. The U-6 rate has dropped more than a percentage point over the last year.
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REPORT: Job creation surged in May