US employers created the fewest number of jobs in more than five years in May, just 38,000, making it difficult for the Federal Reserve to justify raising interest rates in the near future.
ADVERTISEMENTThere was disappointing jobs news from the United States.
Employers there created the fewest number of positions in more than five years in May.
Payrolls increased by only 38,000 last month.
One reason for that is a strike by workers with the telecoms company Verizon, who are counted as unemployed because they were not getting wages during the dispute.
But even without that Verizon effect the total of new jobs would have been a mere 72,000.
counted 35k striking Verizon workers as unemployed, but went back to work this week https://t.co/E8WoH3oCJlpic.twitter.com/wH5ovaGag8
— Laura Rozen (@lrozen) June 3, 2016
The slowdown in job growth was right across the board including services. There were also declines in construction, manufacturing and mining.
There was no sign of meaningful wage growth sufficient to boost inflation. Average hourly earnings rose five cents, or 0.2 percent, last month. That kept the year-on-year rise at 2.5 percent.
Economists say wage growth of between 3.0 percent and 3.5 percent is needed to lift inflation to the Federal Reserve’s 2.0 percent target.
The head of the US central bank, Janet Yellen, has said monthly gains of around 100,000 jobs are needed to keep up with the increasing work-age population.
These latest numbers, pointing to labour market weakness, make it difficult for the Fed to justify raising interest rates in the near future.
A few things about this morning’s interesting, if not confusing, US #jobs report. https://t.co/8X5XP1T4rI
YahooFinance</a> <a href="https://twitter.com/YahooNews">YahooNewsYahoo</a></p>— Mohamed A. El-Erian (elerianm) June 3, 2016
However the weak employment report contrasted with data on consumer spending, industrial production and housing that have suggested the US economy is gathering speed.
In separate reports on Friday, the Commerce Department said goods exports rebounded strongly in April and orders for manufactured goods recorded their biggest gain in six months.
Some economists believe the sharp slowdown in employment last month was payback after unseasonably warm weather boosted hiring in February and March.
They also viewed the weak payroll growth as a delayed response to tepid first-quarter economic growth.
