source – CNN Business
The month of May was bad for US employment generation. U.S. job growth slowed sharply in May and wages rose less than expected. The problem increases the fear that a loss of momentum in economic activity could be spreading to the labour market, which could put pressure on the Federal Reserve to cut interest rates this year.
This report by the Labour Department on Friday was before a recent escalation in trade tensions between the United States and two of its major trading partners, China and Mexico. Analysts have warned the trade fights could undermine the economy, which will celebrate 10 years of expansion next month, the longest on record.
If we closely watch employment report, far fewer jobs were created in March and April than previously reported which indicates that hiring percentage has a decline, putting the serious problem to industry labor supply.
“Today’s report makes a cut more likely, and supports our view that the trade tensions will ultimately slow growth enough for the Fed to respond in September and December with cuts,” said Joseph Song, an economist at Bank of America Merrill Lynch in New York.
Nonfarm payrolls increased by 75,000 jobs last month, the government said. It was the second time this year that job gains dropped below 100,000. Economists polled by Reuters had forecast payrolls rising by 185,000 jobs last month. Job growth in March and April was revised down by 75,000.
In early May, President Donald Trump slapped additional tariffs of up to 25% on $200 billion of Chinese goods, which prompted retaliation by Beijing. Last week, Trump also said he would impose a tariff on all goods from Mexico to force authorities in that country to stop immigrants from Central America from crossing the border into the United States.
Fed Chairman Jerome Powell said on Tuesday the U.S. central bank was closely monitoring the implications of the trade tensions on the economy and would “act as appropriate to sustain the expansion.”
Trump made no comment about May’s weak hiring but defended duties on Chinese goods on Twitter. White House economic adviser Kevin Hassett told Fox Business Network that bad weather in the Midwest was to blame and described the meager job gains as “a little bit of a blip down.”
However, the Economist has a different perspective. They said this all happens due to weather.