PHILADELPHIA, June 6 (UPI) -- The U.S. labor market report for May is 'concerning' and might affect whether the Federal Reserve raises short-term interest rates, Chairwoman Janet Yellen said Monday.
Yellen told the World Affairs Council in Philadelphia that only adding 38,000 jobs in May, far below what economists had forecast, was troubling.
"The uncertainties are sizable, and progress toward our goals and, by implication, the appropriate stance of monetary policy will depend on how these uncertainties evolve," Yellen said.
Despite the gloomy report, Yellen said the economy has positive signs.
"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," she said.
Fed officials will update their economic outlook at policy meetings on June 14 and 15.
On May 28, Yellen said, "The economy is continuing to improve."
The economy added about 2.7 million jobs last year -- an average of about 230,000 a month. In the first three months of this year, however, there were fewer than 200,000 added each month.
The unemployment rate dropped to 4.7 percent in May, but "that decline occurred not because more people had jobs but because fewer people reported that they were actively seeking work," said Yellen.
The economic report showed the labor force was reduced by 0.2 percentage point to 62.6 percent.
Yellen said she and her colleagues are "wrestling with" the question of whether this points to a temporary slowdown, or to major weaknesses in the economy.
"What is certain is that monetary policy is not on a preset course," she said, "and that the Committee will respond to new data and reassess risks so as to best achieve our goals."
In December, the Fed raised short-term interest rates by a quarter percentage point to a range between 0.25 percent and 0.5 percent after rates were at zero for seven years.