Although the May jobs report showed a shockingly low number of jobs added, it is the inflation rate that is keeping the Fed from rising interest rates, Janet Yellen, chair of the Board of Governors of the Federal Reserve System, said Monday at the Philadelphia World Affairs Council.

Whereas the jobs report on Friday was disappointing, the overall labor market situation has been positive, Yellen said. The economy added 2.7 million jobs last year, an average of 230,000 a month.

Last Friday the jobs report came in at 38,000, far lower than the economists’ prediction of 162,000.

“Although this recent labor market report was, on balance, concerning, let me emphasize that one should never attach too much significance to any single monthly report,” Yellen said. “Other timely indicators from the labor market have been more positive.”

She is not the only economist to make that observation.

“This is an outlier because it’s not really consistent,” Goldman Sachs Chief Economist Jan Hatzius said in response to the jobs report.

Other companies weighed in on Yellen’s comments Monday, agreeing that labor market indicators seemed strong despite the recent jobs report.

“We agree with Yellen that other labor market indicators, such as initial jobless claims, the job openings rate and the voluntary quits rate, suggest that labor market conditions remain robust,” said Capital Economics Chief Economist Paul Ashworth.

“In short, Yellen and other Fed officials might still hike interest rates in July, if a rebound in employment growth in June shows the weakness in April and May to be a temporary blip,” Ashworth said. “Our guess is that payroll growth will rebound to roughly 150,000, which will be closer to 200,000 once the returning 35,000 Verizon strikers are factored in.”

Because of all of this, Yellen indicated that a rate hike is not out of the question, and may still be on the horizon.

“My overall assessment is that the current stance of monetary policy is generally appropriate, in that it is providing support to the economy by encouraging further labor market improvement that will help return inflation to 2%,” Yellen said.

“At the same time, I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run,” she said. 

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