Jobless rate falls to 4.8 pct.
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June 6, 1997: 10:20 a.m. ET
Unemployment rate edges lower and job creation slows to 138,000 for May
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NEW YORK (CNNfn) - The unemployment rate in the U.S. in May fell to its lowest level since 1973 but job growth showed signs of losing steam.
The U.S. Department of Labor said Friday that the nation's employment rate fell 0.1 percent to 4.8 percent for the month of May, down from 4.9 percent the previous month. Analysts had been expecting an uptick to 5 percent.
However, non-farm payrolls inched up just 138,000 in May, well below economists' predictions of 233,000.
The low figure was a sharp contrast to April's revised number of 323,000 from an initial estimate of 142,000. The Labor Department attributed the difference to an updating of the department's sampling procedures.
Much of May payrolls growth came in the service sector, such as the amusement, recreation and hotel industries.
Construction employment showed signs of growth in May after losing ground in April due to poor weather. Manufacturing, however, was held flat by auto strikes.
Perhaps reflecting the overall hot labor market, average earnings rose by four cents an hour last month, to $12.19.
Labor Secretary Alexis Herman pointed to wage trends which, she said, indicated a low threat of inflation.
"The average wage gain has been approximately 3.8 percent. That has been very consistent for this year. That's been a modest growth in that area," Herman said on CNNfn's "In The Game."
"We don't see that leading to any inflationary pressures on the economy."
The unemployment figures are watched closely by both Wall Street and the Federal Reserve for signs of inflation. The report showed that so far this year, payroll growth this year is averaging 229,000 per month and could lead the Fed to consider an interest rate to slow the economy down when it meets in July.
The bond market reacted negatively, not so much to the May figure, but the revisions, said Jim Bianco, bond strategist for Arbor Trading.
"What's really troubling the market right now is the big revision that we saw in April and the revision that we saw in March," he said. "The big trend is upward and that's what's unsettling the market."
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Department of Labor
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