May jobs growth beat expectations, but that doesn't change the big picture. The economy is still expanding, albeit at a modest pace, and remains well below its potential. It's a slow-growth world we live in, but conditions are nevertheless improving at a rather steady if unremarkable pace.
Focusing on the private sector's job creation (because that's the only thing that really counts), we see that jobs have grown on average by about 230K per month for the past six months. That's about the same pace we saw during the best years of the previous business cycle expansion.
On a percentage basis, private sector jobs are up at a 2.3% annualized pace over the past six months. Nothing to get very excited about, but nothing to scorn either. Over the past year, private sector jobs have increased by 2.5%.
It's not widely appreciated, but as the chart above shows, public sector jobs growth has been very weak throughout the current expansion. That's very encouraging, because it means the public sector is giving some extra breathing room to the private sector.
Nothing in this report compels the Fed to tighten, but nothing prevents it from raising rates modestly it is so chooses. Even a 100 bps point rate hike would leave monetary policy in a relatively accommodative and non-threatening position. Nothing to get worked up about here, time to get back to cruisin'.