Plummeting New Job Numbers in May
WASHINGTON – Employers added just 75,000 new jobs in May, the Labor Department said Friday, a stunning development that took many economists by surprise.
In a recent survey by Dow Jones, the consensus among economists was that the job gain for the month would be closer to 180,000.
The slowdown in hiring came at a time when the unemployment rate remains at a 50-year low. Friday’s report is the second in four months in which fewer than 100,000 jobs were added to the nation’s payrolls, suggesting the labor market is weakening.
In addition to the anemic total for May, the Labor Department on Friday also significantly revised down its previously reported job numbers for March and April.
March’s count fell from 189,000 to 153,000 and the April total went from 263,000 to 224,000.
What job growth there was in May was primarily in the professional and business services, which saw 33,000 new hires.
The healthcare sector added 16,000 jobs, while construction added 4,000 and manufacturing, another 3,000.
In the meantime, the retail sector lost 7,600 jobs.
Gad Levanon, chief economist for North America, at The Conference Board, a think tank in Washington, said Friday’s report is consistent with the growing sentiment among markets and economists that the US economy is slowing down.
“Some of this slowdown is coming from the manufacturing sector, where employment growth has almost come to a halt. The slowdown in employment growth could also reflect stronger automation efforts by employers struggling with recruiting and controlling labor cost growth in a tight labor market,” Levanon said.
“We still expect the US economy to continue to grow slightly above its long-term two percent trend through at least the end of the year, generating enough job growth to continue tightening the labor market,” he said.
Wage gains also slowed in May. Average hourly earnings year-over-year declined to 3.1%, one-tenth of a point lower than expectations. The average work week held steady at 34.4 hours.
However, the Conference Board’s Levanon said with the labor market continuing to tighten, he expects acceleration in wages to resume later in the year.
The unemployment rate remained at 3.6%, in line with forecasts and the lowest since December 1969.
Investors have been worried in recent months about slowing growth amid an escalating trade war between the U.S. and China, and more recently, the U.S. and Mexico.
Earlier this week, those concerns deepened when the World Bank announced the global economy has slowed to its lowest pace in three years, forcing the bank to lower its expectations for the world economy for the remainder of the year.
In January the World Bank said it expected the global economy to expand at a rate of 2.9 percent. On Tuesday, it lowered its sites to 2.6 percent.
Christine Lagarde, managing director of the International Monetary Fund, has also been talking about a deceleration in global economic growth this week, though she said a global recession continues to be unlikely.
Last month the IMF said current and threatened U.S.-China tariffs could cut 2020 global gross domestic product by 0.5%, or about $455 billion.
The estimate includes a recent U.S. tariff increase to 25% on a $200 billion list of Chinese imports as well as Trump’s threat to tax another $300 billion worth of consumer imports, representing nearly all trade between the world’s two largest economies.
However, the IMF estimate did not take into account President Trump’s threatened 5% tariffs on goods from Mexico starting on Monday.
In the aftermath of the U.S. trade dispute with Beijing, Mexico had overtaken China as the United States’ largest trading partner.
The gloomy jobs report, along with other rising concerns about the economy, make it likelier that the Federal Reserve will cut rates in the coming months.
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