US Economy: Could Weak May Job Report Numbers Signal A Slowdown?

May jobs report: Hiring slowed down in May, just 75,000 jobs added

The Labor Department reports just seventy-five thousand new jobs in May. The Fed says it's "closely monitoring" the effect of trade wars on the economy, and many economists are predicting a rate cut "to stave off a dramatic slowdown".

Fed policy makers have described the economy as solid, though recent remarks from chairman Jerome Powell signalled openness to lower rates if needed. Stock investors, too, signaled their approval, with the Dow Jones Industrial Average up about 250 points by midday. Hiring in the previous two months was revised lower by a combined 75,000.

Although Friday's jobs figure fell below estimates, unemployment still stands at 3.6 percent - its lowest level in almost 50 years, and wages ticked up 3.1 percent.

Fratantoni added that the outlook for home sales and mortgage activity this summer remains brighter than past year, however, given that mortgage rates have fallen recently.

The economy is showing signs of sluggishness just as the expansion has reached its 10th anniversary. "Coming in the context of tariffs and other economic headwinds makes this number more worrisome". The employment report has a significant impact on Federal Reserve policy decisions because jobs growth is central to the bank's mandate.

Meanwhile, average hourly wages rose 0.2 percent compared to April to 27.83 US dollars, disappointing economists who had hoped for slightly stronger gains. That was the smallest annual gain since September.

Hiring was weaker in retail, construction and manufacturing.

Friday's report said the monthly average gain so far this year is 164,000 - a ways off the 2018 average of 223,000 new monthly jobs.

Employers in the construction sector hired 4,000 workers in May after adding 30,000 jobs to payrolls in April.

Professional and business services and health care expanded, adding 33,000 and 16,000 jobs, respectively. Retailers shed workers for the fifth straight month as stores struggle with online competition. Government payrolls contracted by 15,000, highlighted by drops in state and local education. "One of the economy's only bright spots is finally weakening".

"The economy has been much stronger than markets expected time after time", Hassett said. The company hires software developers in its Sacramento office, and is able to attract employees who are exhausted of the high cost of living in San Francisco.

"In an economy that is 70 percent consumer spending, if the consumer isn't healthy, corporate profitability and the stock market won't save us", Bernstein said.

Hiring slowed sharply in May, as companies in industries hardest hit by President Donald Trump's escalating trade war hesitated to bring on new employees.

Markets had been cruising - despite a global slowdown - when President Trump began May with a threat to increase tariffs from 10 percent to 25 percent on $200 billion worth of Chinese goods.

And last week, he threatened to impose 5% tariffs on all Mexican imports to the United States beginning Monday.

The higher costs from the import taxes - and the potential for more - are causing some companies to scale back plans for spending, investment and expansion. A strong dollar, which makes USA goods costlier overseas, has also slowed the production and export of manufactured goods. Orders for machinery and equipment fell 1% in April.

On the bright side, the USA unemployment rate was only at 3.6%.

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