Job creation took a nosedive in May, with American employers adding a disappointing 75,000 jobs amid escalating trade tensions between the United States and China.
Although the unemployment rate held steady at its nearly 50-year low of 3.6%, the Labor Department’s figures were well below the gain of forecasted gain of 180,000. It marked the second time in four months that nonfarm payrolls improved by less than 100,000, signaling a softening in the labor market.
The report comes as Washington continues to ramp up its rhetoric on tariffs against Beijing. On May 10, President Donald Trump hiked duties from 10% to 25% on $200 billion worth of Chinese imports. The country promptly retaliated with new tariffs of 5% to 25% on $60 billion of U.S. goods. (Just this week, the president also threatened levies on another $300 billion worth of Chinese products.)
Many business leaders and trade executives have spoken out in opposition to the tariffs, which can lead to increased costs for consumers, disruption in supply chains and a subsequently weaker U.S. economy.
Last month, average hourly earnings climbed a slight 3.1%, and the labor force participation rate remained unchanged at 62.8%.
Job growth was most evident in the industries of professional and business services as well as health care and construction. Retail, on the other hand, slashed 7,600 jobs as liquidations and bankruptcies hit retailers such as Sears and K-Mart and others faced pressure to raise wages to compete for employees in a tight labor market.
Additionally, the job count for April was revised downward from 263,000 to 224,000, while March’s numbers were lowered from 189,000 to 153,000.
On the heels of the report, major benchmark indexes were trading in the green. The Dow Jones Industrial Average was up 0.7%, or 183 points, while the S&P 500 similarly grew 0.7%, or 21 points, and the Nasdaq Composite advanced nearly 1%, or 73 points.
Investors have been monitoring the stock market ahead of the Federal Reserve’s rate-setting committee meeting in less than two weeks. On Tuesday, chairman Jerome Powell said that the central bank was keeping an eye on developments between the U.S. and its trading partners, indicating that it could potentially cut interest rates in response to an economic slowdown.
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