Great Job Growth! Just 2.5 Million to Go.

The job isn't done.

Photographer: Matthew Busch / Bloomberg

The latest U.S. jobs report offers encouraging evidence that the world's largest economy is bouncing back from a difficult winter. It shouldn’t be interpreted, though, as a sign that the Federal Reserve must rush to pull back on its efforts to support growth.

The Labor Department estimated that nonfarm employers added 280,000 workers to their payrolls in May, bringing the three-month average to about 207,000 -- more than enough to compensate for the natural expansion of the labor force. The unemployment rate rose to 5.5 percent from 5.4 percent, but for a good reason: The workforce grew as more people started looking for jobs.

QuickTake Monthly U.S. Jobs Report

For all the progress made, however, the recovery remains far from complete. The number of people stuck in part-time jobs, or staying out of the labor force, still exceeds by millions the level that prevailed before the 2008 recession. If the unemployment rate took those people into account, it would be closer to 7 percent -- or about 2.5 million jobs away from full employment, the point at which inflation tends to kick in. Here's how that looks:

Workers' pay, too, leaves much to be desired. Wage growth accelerated a bit in May: The Labor Department estimated that average hourly earnings for production and nonsupervisory employees increased to $20.97, up 0.3 percent from April and 2 percent from a year earlier. That pace, however, falls far short of the pre-recession average of 3.4 percent.

Given the slack in the labor market, the Fed need not be overly concerned that its monetary stimulus will trigger runaway inflation. On the contrary, it should keep doing what it can to get unemployed and underemployed Americans back to work. To that end, the International Monetary Fund has recommended that the central bank hold its interest-rate target near zero into 2016, several months longer than investors currently expect. Barring any surprises, that's an excellent idea.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.