The U.S. economy added a mere 38,000 nonfarm payroll positions in May, the lowest gain since September 2010, according to the latest monthly employment report from the Bureau of Labor Statistics, released this morning. The seasonally adjusted figure is down 69 percent from April's downward-revised addition of 123,000 jobs. The weak results, falling well short of the 160,000 payroll additions forecast by Moody's Analytics chief economist Mark Zandi and reported by ARCHITECT earlier this week, reflect a stalling in U.S job growth compounded by the six-week strike of roughly 36,000 Verizon employees, which came to an end last Friday.
The Federal Reserve has been expected to raise interest rates, and soon, but today's release could put those plans on hold. "It makes it a lot tougher for the Fed, clearly. It now puts them in an awkward position of having to justify higher rates into a slowing job market," Natixis Global Asset Management chief market strategist David Lafferty told CNBC. "I don't think history would look very favorably on that."
The national unemployment rate dipped 30 basis points to 4.7 percent in May, the lowest in more than eight years, albeit due mostly to Americans leaving the labor force, while labor-force participation fell 20 basis points to 62.6 percent. This month's average hourly wages for all private, nonfarm workers increased by 5 cents to $25.59, following an increase of 9 cents in April.
The sluggish hiring environment across the economy was felt more significantly in some sectors than in others. The Architectural and Engineering Services sector added 2,100 jobs in May to recover from losses in April, which were reflected among key sub-categories including Architectural Services and Landscape Architectural Services in addition to weak gains in Engineering and Drafting Services. With its monthly employment report, the BLS also releases detailed information subsets of key markets with a one month lag, offering more information on the nuances of April's payroll contraction for the Architectural and Engineering Services category (detailed later in this article). The extent to which these sub-sectors experienced this slight recovery will be revealed when the BLS releases historical May break-out data for those sub-sectors next month. Meanwhile, Construction shed 15,000 jobs in May while the Manufacturing sector ended the month down 10,000 jobs.
From the BLS's historical data release: Below is a monthly job-growth breakdown of the Architectural Services, Landscape Architectural Services, and Engineering and Drafting Services sectors—all under the Architectural and Engineering Services category—from April 2015 to April 2016. Although the overall category posted losses in April and gains in May, how exactly these categories experienced the recovery will be revealed next month.