Fed Chairwoman Janet Yellen said on Monday that Friday’s weak labor report has raised “new questions” about the US economic outlook, adding that a further increase in the federal funds rate would only be appropriate “if incoming data are consistent with labor market conditions strengthening and inflation making progress toward our 2% objective.”
In this article, the term ‘labor’ refers to workers, then national workforce, jobs, and employment.
Yellen did not explicitly dismiss the notion of a hike this June, but investors don’t expect an increase next month in light of the Labor Department report released on Friday, which showed employers only added 38,000 jobs in May, down from 123,000 jobs created in April to the smallest monthly gain since September 2010.
Yellen said in a speech at the World Affairs Council of Philadelphia: “New questions about the economic outlook have been raised by recent labor market data. Is the markedly reduced pace of hiring in April and May a harbinger of a persistent slowdown in the broader economy? Or will monthly payroll gains move up toward the solid pace they maintained earlier this year and in 2015?”
However, she stressed that “although this recent labor market report was, on balance, concerning, let me emphasize that one should never attach too much significance to any single monthly report.”
“If incoming data are consistent with labor market conditions strengthening and inflation making progress toward our 2% objective, as I expect, further gradual increases in the federal funds rate are likely to be appropriate,” Yellen added.
“Speaking for myself, although the economy recently has been affected by a mix of countervailing forces, I see good reasons to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones.”