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US jobs growth in shock May slowdown | US jobs growth in shock May slowdown |
(about 1 hour later) | |
The US economy created far fewer jobs than expected last month and wages also rose less than forecast. | The US economy created far fewer jobs than expected last month and wages also rose less than forecast. |
Some 75,000 jobs were created in May rather than the 185,000 expected by analysts, the Bureau of Labor Statistics said. | Some 75,000 jobs were created in May rather than the 185,000 expected by analysts, the Bureau of Labor Statistics said. |
The dollar dropped as markets assumed that the slower-than-expected job growth meant a rate cut by the US Federal Reserve was more likely. | The dollar dropped as markets assumed that the slower-than-expected job growth meant a rate cut by the US Federal Reserve was more likely. |
But the US unemployment rate remained at 3.6%, its lowest level for 50 years. | But the US unemployment rate remained at 3.6%, its lowest level for 50 years. |
The US dollar fell more than 0.4% against the pound, the euro and the yen after the jobs figures were published. | The US dollar fell more than 0.4% against the pound, the euro and the yen after the jobs figures were published. |
"While the US jobless rate remains at its historic low of 3.6%, far fewer jobs are being created and wage rises are modest," said David Lamb, head of dealing at Fexco Corporate Payments. | "While the US jobless rate remains at its historic low of 3.6%, far fewer jobs are being created and wage rises are modest," said David Lamb, head of dealing at Fexco Corporate Payments. |
"Add a weakening economy to the absence of inflation and the conventional answer is an interest rate cut," he added. | "Add a weakening economy to the absence of inflation and the conventional answer is an interest rate cut," he added. |
"While few expect the Fed to cut rates this month, the likelihood of a July cut has risen sharply - and as a result the greenback has swooned." | "While few expect the Fed to cut rates this month, the likelihood of a July cut has risen sharply - and as a result the greenback has swooned." |
Monthly wage growth remained moderate, with average hourly earnings increasing by six cents, or 0.2%, in May following a similar gain in April. That lowered the annual increase in wages to 3.1% from 3.2%. | Monthly wage growth remained moderate, with average hourly earnings increasing by six cents, or 0.2%, in May following a similar gain in April. That lowered the annual increase in wages to 3.1% from 3.2%. |
The number of people unemployed was "little changed" at 5.9 million, the Bureau of Labor Statistics said. | The number of people unemployed was "little changed" at 5.9 million, the Bureau of Labor Statistics said. |
The US economy has been largely resilient to the country's trade war with China so far. | The US economy has been largely resilient to the country's trade war with China so far. |
In early May, US President Donald Trump raised tariffs to 25% on $200bn of Chinese goods, prompting retaliation from China. | In early May, US President Donald Trump raised tariffs to 25% on $200bn of Chinese goods, prompting retaliation from China. |
But analysts have warned that the trade fights could undermine the economy. | But analysts have warned that the trade fights could undermine the economy. |
Last week, President Trump said he would impose a tariff on all goods from Mexico to try to force Mexican authorities to stop Central American immigrants from crossing the US border. | |
Tariffs are due to be imposed from 10 June, starting at 5%, and rising each month until reaching 25% in October. | |
Fed chairman Jerome Powell said on Tuesday that the central bank was closely monitoring the implications of the trade tensions on the economy and would "act as appropriate to sustain [economic] expansion". | |
Curt Long, chief economist with the National Association of Federally-Insured Credit Unions, said: "This [jobs] report, combined with nerves around tariffs, will be enough to force a rate cut from the Fed in either June or July." |