U.S. businesses added just 38,000 jobs in May, a surprisingly low figure that fell well short of economists’ expectations and likely postpones a planned interest rate hike by the Federal Reserve. Economists had expected job gains of roughly 160,000 for the month. “There’s one word for it, which is just shocking,” Dan North, chief economist at Euler Hermes North America, told CNBC. “Unfortunately it does look like a trend. It’s not great news.”
The U.S. economy had added 123,000 jobs in April and 186,000 jobs in March – both figures that were significantly revised downward from initial figures. May’s figures were the worst since 2010.
The unemployment rate fell from 5% to 4.7%, the lowest figure in eight-and-a-half years. However, the drop was influenced by the declining number of U.S. citizens opting to look for work. The labor force participation rate was recorded as 62.6%, near a four-decade low. A record 94.7 million Americans are not in the labor force.
In press conference remarks this week, Federal Reserve Chairwoman Janet Yellen said the jobs report was “disappointing” but generally painted a positive view of the economy. “Although this recent labor market report was, on balance, concerning, let me emphasize that one should never attach too much significance to any single monthly report,” Yellen said, as reported by USA Today. She added that “further gradual increases” were likely, but did not specify a timeline. The Federal Reserve will next meet on June 14-15.
Yellen did highlight indicators such as rising consumer spending and increased home values as signals of a steady economy, as economists continue to debate the exact trajectory of the U.S. economy this year and beyond.
The U.S. GDP growth rate has declined for four straight quarters and measured at .5% in the first quarter of this year. The promotional product industry experienced slowing growth during that period too, recording 1.4% growth during 2016’s first quarter and 3.4% annual sales growth for 2015.