US Private Payrolls Rise In May; Weekly Jobless Claims Fall

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. 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.

In a second report on Thursday, the Labor Department said initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 267,000 for the week ended May 28. Claims have now been below 300,000, a threshold associated with a strong job market, for 65 straight weeks, the longest streak since 1973.

The four-week moving average of claims, considered a bettermeasure of labor market trends as it irons out week-to-weekvolatility, fell 1,750 to 276,750 last week.

According to a Reuters survey, employment likely increased 162,000 last month after rising by 160,000 jobs in April. That pace of job gains is more than enough to keep up with population growth. The unemployment rate is forecast slipping to 4.9 percent in May from 5 percent in April.

A government report last week suggested a month-long strike by Verizon (VZ.N) workers could cut 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.

Prices for long-dated U.S. Treasuries dipped after the data. The U.S. dollar .DXY was weaker against a basket of currencies and U.S. stock index futures were trading lower.

ECONOMIC MOMENTUM

The Fed has signaled its intention to raise rates again soon if job gains continue and economic data remains consistent with a pickup in economic growth in the second quarter. Fed Chair Janet Yellen said last week that a rate hike would probably be appropriate in the "coming months" if these conditions are met.

So far, data on consumer spending, industrial production, goods exports and housing have suggested the economy is gathering momentum after growth slowed to a 0.8 percent annualized rate in the first quarter.

In a third report, global outplacement consultancy Challenger, Gray & Christmas said job cuts announced by U.S.-based employers fell 53 percent to 30,157 in May. That was the smallest number since December.

"May could be the start of a summer slowdown in the pace of job cutting as companies take a pause following the period of heavy downsizing that started the year," said John Challenger, chief executive officer of Challenger, Gray & Christmas.

"In general, oil prices have improved somewhat since the beginning of the year, though they are still less than half of what they were at oil's recent peak. However, the recent gains may be enough to at least temporarily slow job cuts in the sector."