Jobs report signals possible slowdown in U.S. economy

May jobs report: Hiring slowed down in May, just 75,000 jobs added

Unemployment held steady at 3-point-6 percent, meaning joblessness is still hovering near a half-century low.

As he ploughs ahead with his aggressive and unorthodox trade agenda, President Donald Trump has been comforted that vigorous job gains and historically low unemployment provide a buffer against retaliation in tariff battles with major trading partners that have hit the U.S. manufacturing sector in particular. "It definitely looks like we've downshifted in the pace of job growth", said Mr Michael Feroli, chief USA economist for JPMorgan Chase & Co.

On the heels of the report, major benchmark indexes were trading in the green.

Market expectations for a rate cut were already climbing before Powell spoke. For most of this year, the Fed has indicated that it would take a patient approach toward rate changes. Prior to April's report, the consistent unemployment rate suggested that workers are jumping back into the workforce to fill open jobs, rather than the workers who are now collecting unemployment welfare, according to WSJ.

On the other hand, the BLS slashed its job growth estimated for March and April by 75,000 in total, bringing the 12-month average growth to 196,000 a month-the first time it dropped below 200,000 since April 2018. A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, dropped two-tenths of a percentage point to 7.1 per cent last month, the lowest since December 2000.

Manufacturers have barely added jobs in the past three months after healthy gains previous year, a sign that trade conflicts and a slowdown in auto sales might be slowing hiring.

Among the sectors adding jobs were professional and business services (up 33,000) and health care (up 16,000), according to the labor department.

Retail jobs fell by 7,600 for a fourth-straight drop while transportation and warehousing and nondurable goods also slipped.

The odds of a rate cut rose immediately on the news, with futures placing the chance of a Federal interest rate cut at 79 percent.

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White House economic advisor Kevin Hassett said that bad weather was the main reason behind the employment slowdown, and added the report showed a "a little bit of a blip down". Flooding in the central US may have reduced the May payroll number by 40,000 jobs, Hassett said on Bloomberg Television.

Last month's modest job gain followed a much healthier increase of 224,000 in April. Last year, GM said it would shed 14,000 workers.

Wages rose 3.1% from a year earlier, down slightly from last month's gain of 3.2%. That indicates the tight labor market may offer limited support for consumer spending.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was unchanged at 62.8 per cent last month. Steady job growth has compelled many employers to raise pay to attract and keep workers, which, in turn, has forced up average hourly wages.

Lawrence Yun, chief economist for the National Association of Realtors, said the fact that the US had another month of job additions should help fuel demand for housing.

- Private employment grew by 90,000 after a downwardly revised 205,000 increase.

Trade conflicts have had no impact on the company, Guccione added. That was the smallest such annual increase since September.

Bloomberg's Chris Middleton and Sophie Caronello contributed.

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