Economy adds just 38K jobs in May

The U.S. economy added a dismal 38,000 jobs in May, its worst performance in six years. 

{mosads}Still, the unemployment rate fell 0.3 percentage points to 4.7 percent, its lowest level since 2007, the Labor Department reported on Friday.

Economists had forecast around 160,000 jobs would be added in May.

Presumptive GOP presidential nominee Donald Trump commented on the numbers moments after they were revealed.

“Terrible jobs report just reported. Only 38,000 jobs added. Bombshell!” he tweeted.

Terrible jobs report just reported. Only 38,000 jobs added. Bombshell!

— Donald J. Trump (@realDonaldTrump) June 3, 2016

House Ways and Means Committee Chairman Kevin Brady (R-Texas) called the report “troubling news.” 

“With job growth slowing, involuntary part-time work rising, and the labor force shrinking, this proves that our economy isn’t creating opportunity for all Americans,” Brady said. 

The jobs report, as well as the United Kingdom’s upcoming vote on exiting the European Union, will likely cement a decision by the Federal Reserve to hold off on a rate hike until July. 

Fed Chairwoman Janet Yellen said a week ago that a short-term rate increase could come soon, but the central bank will probably keep rates where they are at the board’s June meeting. 

Jason Furman, chairman of the Council of Economic Advisers, said the jobs added in May were “considerably below both expectations and the pace of growth in recent months, with volatility in monthly data and a temporary strike in the telecommunications industry contributing to the disappointingly low number.”

He pointed to both volatility and temporary factors in the monthly jobs data as reasons why May came in so skewed despite other signs of strength in the economy. 

“it is important to view this month’s report in the context of both other recent data, including recent trends in consumer spending, vehicle and housing sales, and initial claims for unemployment insurance, as well as the longer-run trend in job growth,” Furman said.

Justin Wolfers, a professor of economics at the University of Michigan, said that even with the 100,0000 margin of error in payrolls, Friday’s figure reflects a slowing economy. 

“There’s nothing good to say about this employment report,” Wolfers tweeted. 

Mark Zandi, chief economist for Moody’s Analytics, said that the report “feels like a fluke.”

Zandi said that the jobs report is a surprise because recent economic reports have been encouraging, including consumer spending, which saw a solid rise in April.

He also noted that the response rate to the payroll survey was only 74 percent, compared with an average of 82 percent in the past 3 years.  

“This suggests there will be some sizable revisions to the data,” Zandi said. 

“The big decline in unemployment, especially long-term unemployed, and labor force participation also adds to the narrative that there are data problems,” he said. 

The labor force contracted by 458,000 workers, lowering the participation rate by 0.2 points to 62.6.  In total, job creation in March and April was 59,000 less than first reported. 

Monthly job gains have fallen sharply, to 116,000 a month,  substantially slower than the average of 229,000 through last year. 

Mining continued losing jobs, shedding 10,000 last month. Since reaching a peak in September 2014, mining has lost 207,000 jobs. 

Construction payrolls fell by 15,000, and manufacturing dropped by 10,000. 

Employment in information-related fields decreased because of the Verizon strike, which cost the economy 34,000 jobs last month. 

Hourly wages in May rose 5 cents and have risen 2.5 percent over the year as the labor market has tightened. 

The government has estimated that the economy grew at just a 0.8 percent annual rate in the January–March quarter.

Economists are expecting a rebound in the April–June quarter, but the May jobs numbers could dampen that forecast. 

Updated at 9:24 a.m. and 10:45 a.m.