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US Adds Fewer Jobs Than Expected in May, April Revised Lower; Unemployment Rate Unchanged at 3.6%

The US added far fewer jobs than expected in May while the unemployment rate remained at historically low levels, as professional and business services led the gain, government data showed on Friday.

Total non-farm payroll employment rose by 75,000 last month, the Bureau of Labor Statistics said, compared with April’s rate of 224,000, which was revised down from 263,000 previously. Econoday’s consensus was for 180,000.

The unemployment rate remained at 3.6%, down slightly from Econoday’s view of 3.7%. Before last month’s print, the rate was last at that level in December 1969. Average hourly earnings rose six cents to $27.83 and are up 3.1% annually, just below Econoday’s call for 3.2%.

“We have long expected hiring to slow in 2019, and now it has,” said Leslie Preston, a senior economist at TD Bank. “There are simply fewer people available to fill job openings, pushing job growth to slow in line with trend growth in the labor force of around 120k per month. However, it is tough to argue against the reality that this slowing was more abrupt than expected. It may signal that the weakness we’ve seen in business confidence measures and in investment spending may now be showing up in hiring.”

The BLS report showed that the average workweek was unchanged at 34.4 hours in May, also just below analysts’ views for a print of 34.5 hours.

Professional and business services added 33,000 jobs last month and health care rose by 16,000. Construction employment gained 4,000 jobs.

Stocks rose on the data amid investors’ expectations that the weaker-than-expected print will pressure the Federal Reserve to cut interest rates.

“This will be the tension that the Fed will need to navigate at its upcoming meeting June 19,” Preston said. “Do they put more weight on broad measures of labor market slack that point to a tight labor market, and view slower hiring as a natural part of a mature economic cycle? Or, do they see the hiring slowdown as the manifestation of weaker business confidence, where worries about the risks of slower global growth and tariff threats are increasing.”

Preston said she believes the Fed will hold off to see whether further data that indicates if May’s result “reflects something more insidious.”

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