US Jobs Growth in Shock May Slowdown

US Jobs Growth in Shock May Slowdown

The US economy generated far fewer jobs than expected last month and wages also rose less than forecast.

Some 75,000 jobs were generated in May rather than the 185,000 expected by analysts, the Bureau of Labor Statistics said.

The dollar released as markets expected that the slower-than-expected job growth meant a rate cut by the US Federal Reserve was more likely.

But the US joblessness rate remained at 3.6%, its lowest level for 50 years.

The US dollar fell more than 0.4% against the pound, the euro and the yen after the jobs figures were published.

“While the US unemployed rate remains at its historic low of 3.6%, far fewer jobs are being made and wage rises are modest,” said David Lamb, head of dealing at Fexco Corporate Payments.

“Add a weakening economy to the absence of inflation and the conventional answer is an interest rate cut,” he added.

“While few expect the Fed to cut rates this month, the likelihood of a July cut has risen sharply – and as a result the greenback has swooned.”

Monthly salary growth remained moderate; with average hourly earnings increasing by six cents, or 0.2%, in May following a similar gain in April. That let down the annual increase in wages to 3.1% from 3.2%.

The number of jobless people was “little changed” at 5.9 million, the Bureau of Labor Statistics said.

The US economy has been mostly resilient to the country’s trade war with China so far.

In early May, US President Donald Trump raised tariffs to 25% on $200bn of Chinese goods, prompting retaliation from China.

But analysts have advised that the trade fights could undermine the economy.

  • Economic clouds gather over Germany
  • World Bank warns of weaker global growth

Last week, President Trump said he would apply a tariff on all goods from Mexico to try to force Mexican authorities to stop Central American immigrants from crossing the US border.

Tariffs are due to be applied from 10 June, starting at 5%, and rising each month until reaching 25% in October.

Fed chairman Jerome Powell said on Tuesday that the central bank was closely monitoring the effects of the trade tensions on the economy and would “act as appropriate to sustain [economic] expansion”.


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