WASHINGTON — The May employment report gave another weak, recession-like reading Friday, but its most striking inclusion was a 20-year-high 0.5-point jump in the unemployment rate to 5.5%, which probably overstates the weakening in the labor market.
The overall tenor of the employment report was weak, however, with payrolls down 49,000. In contrast, average hourly earnings continued to rise, up 0.3% to a 3.5% increase over the year.
This latter point seems anomalous in a declining economy. The big wage gains were in transportation, utilities, and information, perhaps areas where contracts for skilled workers are keeping wages on the rise. If job losses continue, wages should soon start to ease along with hiring.
The unemployment rate’s 0.5 point jump was to the highest level since October 2004 and was the biggest jump since a similar point gain in February 1986.
— Market News International