June 7 - More jobs were created, and more Americans are re-joining the workforce- but the government employment report was still weak enough to put the markets at ease ahead of the Fed's next meeting. Bobbi Rebell reports.
Many Americans who had given up are now back on the job hunt. The latest government data showed more Americans are looking for work- and more jobs are being created. The U.S. added 175,000 new jobs in May- just above forecasts. The unemployment rate inched up to 7.6 %. Not a bad thing because more workers are joining the work force. Wells Fargo Chief Economist John Silvia: SOUNDBITE: JOHN SILVIA, CHIEF ECONOMIST, WELLS FARGO (ENGLISH) SAYING: "They want to get back in because now they expect that maybe there is a job for them. What we are seeing then, is maybe the first signs of this pattern. It's been several years and we had expected, you know, some of this pattern to show up earlier in the U.S. economy. Maybe now it is showing up, and that is a very good sign. It's consistent with higher consumer confidence, and consistent with modest job gains. " But don't look for fat paychecks warns Moody's Capital Markets Chief Economist John Lonski. SOUNDBITE: JOHN LONSKI, CHIEF ECONOMIST, MOODY'S CAPITAL MARKETS (ENGLISH) SAYING: "A very high percentage of newly created jobs were from the low-paying sectors or industries of retailing, hospitality and leisure- temporary work, as well as healthcare. In fact, 70 percent of the new jobs in the month of May were from those sectors. As a result, average hourly earnings were unchanged from the previous month, up only 2 percent from a year ago." The stock market rallied on the report- which was just weak enough to calm fears of the Fed reducing its bond buying in the near term. SOUNDBITE: JOHN LONSKI, CHIEF ECONOMIST, MOODY'S CAPITAL MARKETS (ENGLISH) SAYING: "The rise by the unemployment rate suggests that the Fed need not rush to end quantitative easing. And moreover, that increase by the unemployment rate reinforced expectations that the Fed's zero interest rate policy as it relates to short term interest rates, bank deposits, money market funds, might well remain in effect until the middle of 2015." That said Lonski warns investors not to forget the Fed is still looking for an exit strategy to wind down support and that investors should be prepared.