• US adds 75,000 jobs in May

• Unemployment rate down remained near 50-year low of 3.6%

• Labor force participation rate remained at 62.8%

• Wage growth up 0.2% mom; 3.1% yoy

• US jobs and wage growth slows in warning sign for economy

Job growth in the US showed a substantial slowdown in the month of May. The nonfarm payroll (NFP) employment rose by 75,000 jobs in May after soaring by a downwardly revised 224,000 jobs in April, a worrisome turn that points to a slowing economy and is likely to put more pressure on the Federal Reserve to cut interest rates. Consensus had expected employment to increase by about 185,000 jobs compared to the jump of 263,000 jobs originally reported for the previous month.

Hiring slackened off in almost every key segment of the economy and employment fell in retail and government. Professional-oriented companies added 33,000 jobs, hotels and restaurants boosted payrolls by 26,000 and health-care providers hired 16,000 workers. These have been the three fastest-growing areas of the economy since an expansion began 10 years ago. Construction companies hired just 4,000 new workers while retailers shed jobs for the fourth straight month. Government also cut 15,000 jobs, failing to get a boost from temporary census hiring.

On the plus side, the unemployment rate remained near a 50-year low of 3.6% as a 113,000-person increase in the household survey measure of employment was offset by a 176,000-person jump in the size of the labor force. The labor force participation rate remained steady at 62.8%, and other measures of labor market slack improved. The U6 unemployment rate, which includes people working part-time for economic reasons fell to 7.1%, from 7.3% in April. That is the lowest rate seen since 2000.

Despite the historically low unemployment rate, the report also showed average hourly employees earnings edged up just 0.2% mom while the increase over the past 12 months slowed to 3.1% from 3.2%.

Source: BIMB Securities Research - 10 Jun 2019