Dive Brief:

• After recent third-party reports that private hiring slowed to the lowest rate in more than a year in April, the Labor Department on Friday announced a solid gain of 223,000 non-farm payrolls and an unemployment rate of 5.4%.
• The unemployment rate is now the lowest that it's been in seven years. But it's not all good news.
• In a separate report on Thursday, the Labor Department said nonfarm productivity declined at a 1.9 percent annual rate in the first quarter after dropping at a 2.1 percent pace in the fourth quarter. That was the first back-to-back fall in productivity since 2006.

Dive Insight:

According to Reuters, "steadily rising labor costs against the backdrop of weak productivity could further squeeze corporate profits, which already are being pressured by the dollar."

Reuters reports that unit labor costs rose only 1.1 percent compared to the first quarter of 2014, a sign that wage inflation remains benign, but there are signs wage growth is firming. Compensation per hour increased at a 3.1 percent rate in the first quarter, the quickest pace in a year. That came on the heels of data last week showing a solid rise in labor costs in the first quarter.