Hiring slowed sharply in the U.S. last month according to official employment figures released by the Bureau of Labor Statistics on Friday morning.
Employers added only 75,000 non-farm payrolls in May, suggesting that American businesses are becoming more cautious as global growth continues to slump due to the escalating trade disputes.
The job additions last month were the fewest since February. Economists were expecting the economy to have added about 185,000 jobs for May, according to data compiled by Bloomberg.
Hiring figures March and April were also revised downward by the government. March’s non-farm payrolls were revised down to 153,000, from 189,000, while April’s numbers were slashed to 224,000 from 263,000. The revisions represent a drop of 75,000 from initial numbers.
Meanwhile, unemployment rate held steady at 3.6% in line with economists’ expectations. Labor force participation stayed unchanged at 62.8% of adults, also in line with forecasts. Average hourly wages jumped 3.1% over last year, missing economists’ forecast of 3.2%.
Professional and business services hired 33,000 people, while health care had 16,000 new hires in May. Construction and manufacturing industries added 4,000, and 3,000 jobs, respectively.
The weak jobs report is likely to force Federal Reserve policymakers to totter toward a cut to interest rates. Policymakers have recently hinted they are prepared to slash interest rates if the U.S. labor market begins to crack as a result of Trump’s trade war.
Speaking at a Fed conference in Chicago earlier this week, Fed chairman Jerome Powell said: “We do not know how or when these trade issues will be resolved. We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion.”
State Street Global Advisors chief investment strategist Michael Arone told CNBC: “I think the Fed has been signaling that they’re ready to step in and lower rates, if the economy continues to be sluggish, if the trade wars continue to have no outcome. I think today’s report is going to support the idea the Fed will be cutting rates. I’m not sure if it will be June, but I don’t think we’re too far away from a Fed rate cut.”
