Verizon’s strike likely depressed May jobs report
U.S. private employers increased hiring in May and new applications for jobless benefits fell last week, further boosting the economic outlook for the second quarter.
Another report on Thursday showed planned layoffs by U.S.-based employers fell 53 percent to a five-month low last month.
The steady stream of upbeat data suggest the economy is regaining momentum after growth slowed sharply at the start of the year, which could allow the Federal Reserve to raise interest rates later this month or in July.
“Labor market conditions are stable, which is all the reassurance the Fed will need to act soon,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
The ADP National Employment Report showed private payrolls increased 173,000 last month on top of the 166,000 jobs added in April. Gains in private employment were nearly broad-based last month, though manufacturing lost 3,000 jobs.
The construction industry added 13,000 jobs and services industry employment increased by 175,000 jobs.
The ADP report, jointly developed with Moody’s Analytics, was published ahead of the release on Friday of the government’s more comprehensive employment report for May.
The ADP report did not appear to be affected by a month-long strike by Verizon (VZ.N) workers, which is expected to have sliced 35,100 jobs from nonfarm payrolls in May.
The striking workers, who returned to their jobs on Wednesday, were regarded as unemployed because they did not receive a salary during the payrolls survey week.
According to a Reuters survey, employment likely increased by 162,000 jobs last month after rising by 160,000 in April. The unemployment rate is forecast slipping to 4.9 percent in May from 5 percent in April.
With the Verizon strike settled, job growth will bounce back in June,” said Stuart Hoffman, chief economist at PNC Financial in Pittsburgh. “Job growth continues to run above the level needed to keep up with normal growth in the labor force, absorbing the job market slack remaining from the recession.”
The economy needs to create about 100,000 jobs per month to keep up with population growth.