The U.S. economy added 75,000 jobs in May, falling well short economists’ estimates of 175,000 jobs, as reported by Bloomberg. Unemployment remained at a 49-year low of 3.6%.
Here are some of the highlights from the report.
1. Slow job growth
Job creation decelerated in May, adding a total of only 75,000 new jobs. Growth slowed across most major industries, while the Retail Trade industry saw a decline in payrolls.
USA Today: “Professional and business services led the job gains, with 33,000. Leisure and hospitality added 26,000; health care and social assistance, 24,000; and construction, 4,000.”
Bloomberg: “Payroll changes by industry showed broad weakness. Manufacturing growth slowed to 3,000 jobs, as forecast, while construction employment expanded by 4,000, down from the prior month. Professional and business services added 33,000, about half the prior month’s number.”
CNBC: “In addition to the weak total for May, the previous two months’ reports saw substantial downward revisions. March’s count fell from 189,000 to 153,000 and the April total was taken down to 224,000 from 263,000, for a total reduction of 75,000 jobs.”
2. Wage growth falls short of expectations
While average hourly earnings did rise slightly, the increase fell short of economists’ expectations.
Business Insider: “Average hourly earnings rose by 0.2% in May, the same as in the previous month. That brought wage growth from a year earlier to 3.1%, missing economist expectations.”
Vox: “Private sector workers (excluding farmworkers) got an average 6-cent hourly raise, adding up to an average hourly pay of $27.83. In the past 12 months, average hourly earnings have only increased by 3.1 percent, and that doesn’t even take inflation into account. That’s even slower wage growth than usual.”
3. Fed may lower interest rates
The lower-than-expected increase in average hourly earnings has led many to speculate that the Fed will reduce rates, possibly as early as this month.
NBC News: “Friday's labor report is likely to cement market expectations that the Fed is preparing to cut interest rates — with some predicting that may happen as soon as June 18 when the Federal Open Market Committee next meets to discuss monetary policymaking.”
Yahoo! Finance: “As of Friday morning, markets were pricing in a 30.8% probability of a rate cut by the Fed’s June meeting, up about 8 percentage points in the minutes following the Bureau of Labor Statistics’ jobs report.”
MarketWatch: “While stock index-futures initially sold off on the news, markets could be entering a period in which bad economic news is good for stock markets, analysts said, as it would increase the chances that the Federal Reserve would move to lower interest rates in the coming months.”
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