MNI DATA ANALYSIS: US May Payrolls Rise 223k, 3.8% Rate>

--Hourly Earnings +0.3% After +0.1% in April, Y/Y Rate Rises To +2.7%

--Stronger Than Expected Payrolls Follow +15k Revision To March-April 

--Participation Rate Slips To 62.7% From 62.8% In April

By Kevin Kastner and Holly Stokes

     WASHINGTON (MNI) - The May employment report released Friday showed 

the nonfarm payrolls gain was much stronger than the 194,000 level 

expected by analysts and the 185,000 gain expected by the whisper 

number, rising 223,000 after a net upward revision of 15,000 in the 

previous two months, data released by the Bureau of Labor Statistics 

Friday showed. 

     At the same time, the unemployment rate fell to 3.8% in May from 

the 3.9% rate posted in April, an 18-year low that suggests the labor 

market remains tight. 

--HOURLY EARNINGS STRONGER THAN EXPECTED

     Average hourly earnings rose 0.3% in May after an unrevised 0.1% 

rise in April, stronger than the 0.2% gain expected by analysts and much 

stronger than the whisper number for a 0.1% gain. Before rounding, May 

hourly earnings were up 0.298% after 0.149% in April. 

     Hourly earnings now stand 2.7% above its year ago level, a mild 

acceleration from the 2.6% year/year rate posted in April, but wage 

growth is still lagging behind levels usually seen with this tight of a 

labor market. 

     The overall average workweek stayed at 34.5 hours for the fourth 

straight month, so the combination of earnings and hours worked should 

be a strong positive factor for personal income growth in May. 

--UNEMPLOYMENT RATE SLIPS

     The unemployment rate fell further to an 18-year low of 3.8% after 

dipping to 3.9% in April, below expectations for the rate to hold steady 

at 3.9% in May. When seen unrounded, the rate fell to 3.755% from 

3.929%, very close to being reported at 3.7%. The labor force 

participation rate fell to 62.7% in May from 62.8% in April. 

     The labor force rose by only 12,000 after dipping by 236,000 last 

month. Household employment rose by 293,000 in May, while the number of 

unemployed plunged by 281,000, a favorable scenario when the unemployment 

rate dips. 

--WIDESPREAD PAYROLLS GAINS

     For May, within payrolls, there were solid gains for retail (+31k), 

health care (+32k), construction (+25k), and manufacturing (+18k), but 

weakness from temporary help services (-8k), suggesting the improvement 

was in permanent jobs. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,M$U$$$,MAUDR$,MT$$$$]