Payrolls climbed in 37 US states in May led by California

[WASHINGTON] Payrolls rose in 37 states in May as the US labour market gained more traction after a weak start to the year.

California led the nation with a 54,200 increase in new hires. New York added 42,700 jobs and Texas boosted employment by 33,200, figures from the Labour Department showed Friday in Washington. While the jobless rate climbed in 25 states last month, 21 had rates significantly lower than the national figure of 5.5 per cent.

More help-wanted signs and fewer dismissals underscore hiring managers' confidence in demand after a first-quarter slowdown. It will take bigger wage gains to help convince Federal Reserve policy makers that the economy can withstand the first increase in the benchmark interest rate in nine years.

"The economy is regaining decent, if not particularly strong, growth in the second quarter," said David Sloan, senior economist at 4Cast Inc in New York. "The tightening labour market is gradually lifting wage pressures."

Michigan and Pennsylvania were among other states registering employment gains. States showing declines included North Dakota and Nebraska.

The unemployment rate rose by the most in North Carolina, Oklahoma and South Dakota, which each showed a 0.2 percentage point increase. Indiana, Connecticut and Washington were the only states where joblessness dropped by a statistically significant margin.

Nebraska had the lowest unemployment rate in the country, at 2.6 per cent in May. West Virginia had the highest rate, at 7.2 per cent.

State and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures are subject to larger sampling errors because they come from smaller surveys, thus making the national figures more reliable, according to the government's Bureau of Labour Statistics.

Friday's data on state jobs follows a report earlier this month that showed US employers added 280,000 workers in May, the most this year, after 221,000 in the prior month. The jobless rate edged up to 5.5 per cent from an almost seven-year low of 5.4 per cent in April as greater employment opportunities prompted more people entered the labour force.

Wage growth that has materialized only gradually has helped keep Fed officials cautious about embarking on the first increase in the benchmark interest rate since 2006.

Private wages, which exclude government workers, rose at the fastest year-over-year pace since 2008, according to the Labour Department's April 30 report on employment costs.

The agency's monthly employment report showed a more moderate 2.3 per cent gain in average hourly earnings in May from a year earlier. While that was the strongest since August 2013, it's still close to the 2 per cent average since the start of the expansion.

"Wage growth remains relatively subdued," Fed Chair Janet Yellen said in a press conference Wednesday at the conclusion of the policy makers' two-day meeting in Washington. "Although progress clearly has been achieved, room for further improvement remains."

The central bankers decided to leave the benchmark interest rate near zero, where it's been since 2008, at their June 16-17 meeting. A majority of economists surveyed by Bloomberg project that the Fed will start raising the rate in September.

BLOOMBERG