Hiring Slows in May; Unemployment Remains at 50-Year Low

The economy slowed more than expected during May with 75,000 new jobs created compared to 224,000 in April, the Bureau of Labor Statistics reported Friday.

Economists had forecast 185,000 new jobs would be created during the month.

May’s job gains were well below the 164,000-job average monthly gain since January, but BLS said the unemployment rate held steady at 3.6 percent, the lowest rate since December 1969. The number of unemployed persons was little changed at 5.9 million.

“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 with the Mortgage Bankers Association. “The job market remains tight, but this report, coupled with other recent data, shows a distinct cooling of the economy this spring.”

Fratantoni noted the slowdown in job growth somewhat offsets the benefits of lower mortgage rates for the housing market, “but we still expect modest growth in home sales and purchase mortgage originations this year,” he said.

BLS said the labor force participation rate held steady at 62.8 percent. Professional and business services and health care employment continued their upward trend, while construction employment changed little in May.

“A slowdown is expected during 2019 compared to 2018 due to rising trade tensions and a tight labor market restricting hiring,” said Elizabeth Norton, Managing Research Director with Transwestern, Houston. “Although this month’s weak job report could be a sign of slower growth, it is too early to call this a trend. The next few months–and especially what the Fed does with interest rates later this month–will tell which direction the economy is headed.”

The Federal Reserve’s Open Market Committee will meet June 18 and 19 to set interest rate policy. Federal Reserve Chairman Jerome Powell has said the central bank wants to keep the expansion going despite an economic slowdown and threats of trade wars with China and Mexico.

“We do not know how or when these issues will be resolved,” Powell said. “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”