U.S. employers drastically slowed their hiring in May, adding just 38,000 jobs, the fewest in more than 5 years and a sign of concern after the economy barely grew in the first three months of the year.
At the same time, the unemployment rate tumbled to 4.7 percent from 5 percent, the Labor Department said Friday, its lowest point since November 2007. The rate fell for a problematic reason: Nearly a half-million jobless Americans stopped looking for work and so were no longer officially counted as unemployed.
The much-weaker-than-expected jobs report will raise doubts that the Federal Reserve will increase the short-term interest rate it controls at its next meeting in mid-June or perhaps even at its subsequent meeting in late July. Many analysts had expected an increase by July.
“The shockingly low payrolls gain in May provides further evidence that the economy is showing clear signs of slowing,” said Laura Rosner, an economist at BNP Paribas.
It is also likely to roil the presidential race, as the expected GOP nominee Donald Trump called it a “terrible jobs report” and a “bombshell” on Twitter. The figure comes just days after President Obama touted his economic record in Elkhart, Indiana.
Hiring in March and April was also revised lower, with job gains now just 123,000 in April, down from an initial estimate of 160,000. March was downgraded to 186,000 from 208,000.
Job gains have now averaged just 116,000 in the past three months, down sharply from an average of 230,000 in the 12 months ending in April.