Published: Sun, June 09, 2019
Markets | By Otis Pena

US Economy: Could Weak May Job Report Numbers Signal A Slowdown?

US Economy: Could Weak May Job Report Numbers Signal A Slowdown?

Automakers are cutting jobs and production as USA sales have declined.

Some of the weakness in hiring could be because of worker shortages, especially in the construction, transportation and manufacturing sectors. White House economic adviser Kevin Hassett told Fox Business Network that bad weather in the Midwest was to blame and described the meagre job gains as 'a little bit of a blip down'. The Labor Department said just 20,000 jobs were added in February, after an explosion in January of more than 300,000 new jobs.

The leftist administration of Mexican President Andrés Manuel López Obrador said earlier that it blocked the bank accounts of 26 people for alleged links to human trafficking, while it detained on June 5 at least 350 migrants crossing into Mexico and arrested two prominent migrant rights activists. All in all, monthly job gains have averaged 164,000 so far this year, a drop from last year's clip of 223,000. That potential weakening, driven in part by President Donald Trump's trade conflicts, has also raised pressure on Federal Reserve policymakers to consider cutting short-term interest rates in the coming months.

The Dow Jones industrial average soared 263.28 points to close at 25,983.94, as the Labor Department's disappointing data for May bolstered hopes that the Federal Reserve will cut interest rates as soon as next month - slashing borrowing costs for consumers and businesses alike. It "tripled the price of oil and plunged the USA into what was then its worst recession" in 40 years.

"We still think Fed officials will want to see evidence of more sustained weakness before taking action", wrote Capital Economics senior U.S. economist Andrew Hunter in a note to clients.

The biggest job gains were seen in professional services and health care last month.

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It was roughly three weeks ago that 71 percent of Fed-watchers surveyed by Bloomberg anticipated at least one rate cut for the year. He also argues that markets and the economy could enjoy an upswing once trade deals are finalized. Additional strong hiring could provide vital support to the economy. For many, the debate is whether it will be a gentle or more violent fall. "It does mean that we likely will not have the strength that we had in past years", Gimbel said.

Or, an unexpectedly weak employment report could intensify concerns that after a healthy first quarter, the USA economy is actually stumbling.

May marked the 104th-straight month of job gains for the nation, a record streak that has helped many Americans, including those with disabilities or criminal histories, to find jobs.

Wages rose 3.1% from a year earlier, down slightly from last month's gain of 3.2%.

Earlier this week, a key metric of United States manufacturing activity showed that while manufacturing continues to expand in general, it did so last month at the slowest pace in over two years. But the worker shortage argument is somewhat undercut by moderate wage growth.

Economists cautioned that May's job figures cover just one month and that broader trends indicate that hiring remains steady. "It underscores the need to save for emergencies and to pay down debt in preparation for the inevitable economic downturn or turbulence".

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