Mike Moran, Chief Economist at Standard Chartered, explained that despite average hourly earnings (AHE) rose 2.6% (annual), below the 2.7% expected, it still points to 3%. 

Key Quotes: 

“April’s 164,000 job additions were weaker than expected, March’s upward revisions offer some offset.”

Lower AHE print adds to the soft reading of the report though we think trend still points to 3% by H2-2018"

“The drop in the unemployment rate to a cycle low of 3.9% appears to be driven largely by the fall in the participation rate (back to 62.8%). While the prime-age participation rate has reached eight-year highs at 82.0%, the topline participation rate continues to struggle to close the gap. This could fuel further debate that the NAIRU may be even lower than most expect – including the Federal Reserve that may look to mark down its current estimate of 4.5%.”

“Weather-related distortions remain a factor, though arguably less so than earlier in the year.”