U.S. payrolls grew by just 75,000 in May, sharply lower than the previous month, while the unemployment rate held steady at a 50-year low.
The expansion trailed the average estimate of 182,500 from economists surveyed by FactSet, and gains for April were adjusted downward to 153,000, a drop of 19%.
The data offer a worrisome indicator as President Trump’s trade wars escalate, with the administration more than doubling some tariffs on Chinese goods in May and planning even more while targeting steadily increasing duties on Mexican imports. Economists and lawmakers have long cautioned that such moves risk undercutting U.S. economic growth buoyed by GOP-led tax cuts in late 2017.
“The big question is how much longer the U.S. expansion can continue,” said Mark Hamrick, senior economic analyst for Bankrate.com. “A couple of years ago, the U.S. economy seemed to have only tailwinds, between a growing global economy and uplift from the tax cut. Now, headwinds predominate and the job market stands at risk.”
Joblessness of 3.6% remained the lowest since 1969, surpassing a previous bottom of 3.7% in November. The lackluster growth behind it, however, may buoy the administration’s push for more lenient monetary policy, either through an interest rate reduction or resuming the purchase of government bonds to loosen up capital markets, a tactic employed during the financial crisis and known as quantitative easing.
Federal Reserve Chairman Jerome Powell has suggested the central bank is open to lower rates, now between 2.25% and 2.5%, if the economy begins to slow due to trade conflicts. Already it has begun to taper the slow wind-down of a balance sheet that swelled to $4.5 trillion through quantitative easing.
