WASHINGTON (AP) – Friday’s U.S. jobs report for May will provide a crucial piece of data for the Federal Reserve to weigh in deciding whether to raise interest rates later this month.
Economists have estimated that employers added 160,000 jobs for a second straight month, according to data provider FactSet. That would be a solid gain, though below the average increase of 232,000 for the past year. The unemployment rate is expected to remain at a low 5 percent.
Many analysts think the Fed will refrain from raising its key short-term rate when it meets in two weeks before increasing rates at its subsequent meeting in late July. It might take a much bigger-than-expected job gain in May – well above 200,000 – to nudge the Fed toward a rate hike this month.
Last month’s hiring figure may have been distorted by a strike at Verizon, which caused about 40,000 workers to walk off the job. The striking employees, now back to work, won’t be counted as employed during May – a fact that could depress the job gain.
The strike could also lower other figures in the jobs report, such as average hourly pay. As a result, the Fed might find it hard to derive a clear picture of the job market from Friday’s data.