Job creation decelerated strongly in May, with nonfarm payrolls up by just 75,000 even as the unemployment rate remained at a 50-year low, the Labor Department reported Friday.
The decline was the second in four months that payrolls increased by less than 100,000 as the labor market continues to show signs of weakening. Economists surveyed by Dow Jones had been looking for a gain of 180,000.
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.
Stock futures fell and bond yields dropped in reaction to the report. Dow Jones Industrial Average futures turned negative before reversing course and turning positive. The yield on the 10-year Treasury fell to its lowest level since September 2017.
“We had expected a slowdown after several years of job gains holding around 200,000, but not this much of a slowdown,” said Beth Ann Bovino, U.S. chief economist for S&P Global Ratings.
Broadly speaking, the report amounted to another dark spot amid fears of a larger sputtering in growth and perhaps a recession within the next year.
“While much of the attention from investors has been focused on trade disputes and the potential for a slowing economy, today’s disappointing employment report provides further evidence that the end of the business cycle is upon us and economic activity is slowing,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
The unemployment rate remained at 3.6%, in line with forecasts and the lowest since December 1969. A broader measure that encompasses discouraged workers and the underemployed holding part-time jobs for economic reasons, sometimes called the real unemployment rate, fell further, from 7.3% to 7.1%, its lowest reading since December 2000.
That decline came to a sharp drop of 299,000 in the part-time for economic reasons category.
Among individual groups, the rate for African Americans fell sharply, from 6.7% to 6.2%, while Asian Americans saw a gain from historically low levels, up from 2.2% to 2.5%.
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