Nonfarm payrolls unemployment rate May 2019

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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, according to a Labor Department report Friday.

The decline was the second time 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.

Broadly speaking, the report amounted to another dark spot amid fears of a larger slowdown.

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 dropoff 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%.

Wages gains also slowed a bit. 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.

Job growth came primarily from professional and business services, which saw 33,000 new hires. Health care expanded by 16,000 while construction added 4,000 and manufacturing contributed 3,000. Retail lost 7,600 jobs.

Most other industries showed little change on the month.

Overall, payroll gains have averaged 164,000 in 2019, a sharp decline from the 223,000 for all of 2018.

Friday’s Bureau of Labor Services reading helped confirm fears that employment growth is slowing. A report Wednesday from ADP and Moody’s Analytics raised fears even more as it said private payrolls increased by just 27,000. The BLS showed private payrolls up 90,000, while government jobs fell by 15,000.

The labor force participation rate was unchanged at 62.8%, in line with expectations.

The report comes with the U.S. economy at a crossroads.

Investors have been worried about slowing growth amid an escalating trade war between the U.S. and some its biggest global partners including China and Mexico. Global growth is slowing as well, with the World Bank earlier this week revising its forecasts lower.

Federal Reserve officials have been watching the data closely. In recent days, comments from several central bank leaders seem to have opened the door for rate cuts in the future, though the timing remains uncertain.

Markets are now pricing in a summer reduction, likely in July, followed by another cut in September or October followed by a third in early 2020.

Economic data points, though, have remained positive if slowing a bit. The Atlanta Fed expects second-quarter GDP to be up 1.5% after the 3.1% growth in the first quarter.



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