Janet Yellen probably just took a June rate hike off the table.
After Friday’s weak jobs report, Yellen expressed concern about the recent hiring slowdown just one week before the Federal Reserve’s committee meets in Washington.
“This past Friday’s labor market report was disappointing,” Yellen said in a speech on Monday in Philadelphia.
In May, employers slammed the brakes on hiring. The U.S. economy only added 38,000 jobs, the lowest monthly job gain since 2010. Job gains in April and May were also revised down, the number of part-time workers surged up and many people stopped looking for work.
Yellen’s speech on Monday a shift in tone from just 10 days prior when she hinted about the possibility of a rate hike in June or July.
Speaking at Harvard in late May, Yellen said, “Probably in the coming months such a move would be appropriate.”
But on Monday, Yellen offered no details to the timetable of future rate hikes. However, she did indicate that rates “need to rise gradually over time” to keep the economy healthy.
Overall, Yellen expressed optimism about the economy, which added roughly 2.7 million jobs last year. The unemployment rate is quite low at 4.7%, and much of its progress during the recovery from the Great Recession has been positive.
This spring, consumer spending too has picked up considerably and wage growth is showing some — albeit small — signs of momentum.
Yellen described the mix of good consumer news and bad jobs news as “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,” Yellen said.
She pointed out that jobless claims have declined in May and that more workers are feeling confident about finding a job, as measured by the quits rate.
The Fed Chair also touched on global concerns, such as China’s slowing economy and referendum vote in the United Kingdom, also known as Brexit. Yellen said a Brexit vote to leave the European Union would have “significant economic repercussions.”
Yellen and the rest of the Fed’s committee meet June 14-15.
–Heather Long contributed to this article