WASHINGTON (AP) — U.S. employers drastically slowed their hiring in May, adding just 38,000, the fewest in more than 5 years and a sign of concern after the economy barely grew in the first three months of the year.
At the same time, the unemployment tumbled to 4.7 percent from 5 percent, the Labor Department said Friday in its monthly unemployment report. The rate, to its lowest point since November 2007, fell for a problematic reason: Nearly a half-million jobless Americans stopped looking for work and so were no longer officially counted as unemployed.
The much-weaker-than-expected jobs report will raise doubts that the Federal Reserve will increase the short-term interest rate it controls at its next meeting in mid-June or perhaps even at its subsequent meeting in late July. Many analysts had expected an increase by July.
The government has estimated that the economy grew at just a 0.8 percent annual rate in the January-March quarter.
Friday’s dismal jobs report was a surprise in part because most recent economic reports have been encouraging: Consumer spending surged in April. Americans ramped up purchases of autos and other big-ticket items, like appliances.
Home sales and construction have also increased. Sales of new homes reached an eight-year high in April.
Even manufacturing, which has suffered from weak growth overseas and a strong dollar that has depressed exports, is showing signs of stabilizing. Factory activity expanded in May for a third straight month, according to a survey of purchasing managers.
In December, after months of economic improvement, the Fed raised its benchmark short-term rate after pegging it near zero for seven years. In March, officials indicated that they expected just two additional increases this year.
Chair Janet Yellen has long made it clear that she studies a “dashboard” of job market data to help assess the economy’s health, rather than a single number such as hiring or unemployment.
Fed officials may not keep investors guessing for long: Yellen will speak Monday in a closely watched address that may show how she has interpreted Friday’s report.
And Lael Brainard, a Fed official who is a longtime skeptic of raising rates, will speak later Friday. Any sign that Brainard is willing to accept higher rates would likely be seen as evidence that Yellen — and the Fed — may act soon.