The economy added 175,000 new jobs in May: Good, but not great

The economy added 175,000 jobs in May, the Bureau of Labor Statistics reported Friday, slightly topping analysts' expectations. The report is the latest evidence that the labor market is continuing to improve — albeit at a slow-and-steady pace that will frustrate thousands of job seekers.

Unemployment inched up to 7.6 percent, from 7.5 percent in April. But "that's partially because the labor force participation rate actually increased," said Joe Weisenthal at Business Insider.

The economy has yet to pick up the kind of pace that will bring the employment rate down to pre-recession levels of about 5 percent anytime soon, and all the evidence to date suggests we're in for a long haul. Here's Sudeep Reddy of The Wall Street Journal on the uneven nature of the recovery.

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However, there was good news for Wall Street. The numbers suggest that employment growth is still chugging along, but not advancing so fast it will spur the Fed to scale back its stimulus policies.

Markets faltered late in May, after Fed Chairman Ben Bernanke hinted that if employment accelerates, the Fed could start "tapering" its quantitative easing program, in which it buys $85 billion in bonds monthly. Futures dipped before the release of this morning's report, as investors worried that strong jobs numbers could push the Fed to start winding down its emergency policies.

But employment appears to be gaining at just the right pace — enough to show growth is steady, but "not enough to change Fed policy or accelerate tapering," said David Kotok at Business Insider.

Like the number of jobs added, the unemployment rate remains in the just right zone. "The figure is down from 8.2 percent a year ago, but well above the 6.5 percent threshold the Fed has set to raise its benchmark interest rate," said Eric Morath at the Wall Street Journal.

And the underemployment rate — a broader measure that includes people with part-time jobs looking for full-time work, and those who have abandoned their job search — actually ticked down: 13.8 percent in May, from 13.9 percent in April.

Restaurants and bars continued creating jobs at a strong pace, adding 38,000 waiters, cooks, and bartenders in May, and 337,000 over the past year. The numbers account for 16 percent of total job growth. "It makes sense on some level, as there is a longer-term shift toward people buying more of their food away from home. And restaurants are a sector where there have been fewer productivity gains than there are in other sectors, like manufacturing," said Neil Irwin at the Washington Post. "A robot may be able to assemble a car, but a cook still grills burgers."

Indeed, manufacturing jobs slid for the third month in a row, dropping 8,000 jobs in May. The construction industry, meanwhile, added a modest 7,000 jobs.

The government — at the local, state, and federal levels — continued to shed jobs. The report appeared to show the first solid evidence of the impact of the sequester, $85 billion in across-the-board spending cuts that took effect in March.

"Federal employment had been on a downward trend since the start of 2011, with the government shedding about 3,000 or 4,000 positions a month through February," said Annie Lowrey at The New York Times. "Then sequestration hit on March 1. And in the last three months, the federal work force has shrunk by about 45,000 positions, including 14,000 in May alone. In part, that is because federal offices have gone on hiring freezes and taken other steps to wrench down their spending."