The U.S. economy added 75K jobs in May, marking the second time in four months that jobs growth failed to reach 100K, and wage growth also slowed.
Or, an unexpectedly weak employment report could intensify concerns that after a healthy first quarter, the USA economy is actually stumbling. The jobless rate, now 3.6 percent, is lower than the 4 percent unemployment rate this is considered ideal.
Consumers have been cautious about spending, and companies are scaling back their investment in high-cost machinery and equipment.
The big miss could increase calls for the U.S. central bank, the Federal Reserve, to cut interest rates for the first time in over a decade.
"Even with these concerns, there would be no basis for the Federal Reserve to cut rates when it meets later this month", said Harris.
Markets were in turmoil in the fourth quarter of 2018 when the Fed was forecasting two rate hikes for 2019, noting strong growth in jobs and wages nationwide.
Adding a sting to the closely watched employment report, the economy created far fewer jobs in March and April than previously reported. Retailers shed workers for a fifth straight month as stores struggle with online competition.
"Economic growth is clearly slowing, as indicated by the slower pace of job growth in May, downward revisions in prior months, and a leveling out of wage growth", said Mike Fratantoni, chief economist for the Mortgage Bankers Association.
Professional and business services and health care expanded, adding 33,000 and 16,000 jobs, respectively.
'The weakness in job growth was broadly experienced across industry groups and not obviously driven by distortions such as weather or strikes, ' said Michael Feroli, an economist at JPMorgan in NY. This was behind forecasts of 180,000 and below the 100,000 level needed to keep up with growth in the working-age population.
Meanwhile, average hourly wages rose 0.2 percent compared to April to 27.83 USA dollars, disappointing economists who had hoped for slightly stronger gains. The Standard and Poor 500 and Dow Jones Industrial Average indexes were up more than one percent on June 7. The president has also threatened to impose tariffs on imports from Mexico, beginning next week.
The higher costs from the import taxes - and the potential for more - might be causing companies to scale back plans for spending, investment and expansion. Factory output fell 0.5% in April, according to a Fed report. With low-priced foreign components costing more or becoming unavailable, manufacturing activity in the U.S.is slowing - with some business owners "citing rising concerns over the cost and uncertainty brought on by tariffs".
This week's ADP jobs report for May, which is separate from the monthly Bureau of Labor Statistics report, showed just 27,000 new jobs.
Automakers are cutting jobs and production as USA sales have slowed. The job gains in May were the fewest since February.
Keeper Security, a cybersecurity firm, said last month that it would expand its Chicago headquarters and add 130 jobs over the next six months to its roughly 160 current staff.
Fratantoni added that the outlook for home sales and mortgage activity this summer remains brighter than a year ago, however, given that mortgage rates have fallen recently.
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