WASHINGTON (MarketWatch) — The U.S. created just 38,000 new jobs in May and hiring in the prior two months was weaker than originally reported, casting doubt on whether the Federal Reserve will raise interest rates later in June.
Hiring was soft last month in virtually every sector except health care. The increase in new jobs was the smallest the economy has created since the fall of 2010. Economists polled by MarketWatch had predicted an increase of 155,000 nonfarm jobs.
Net job creation would have been double the reported number if not for a major Verizon strike that kept 35,000 workers off the job. But the May jobs report was still the weakest in at least two and a half years even if there were no effects from the strike.
The unemployment rate, in a surprising twist, fell to 4.7% from 5% to mark the lowest level since the month before the Great Recession began in December 2007. Yet the decline owed almost entirely to 664,000 people leaving the labor force.
The labor-force participation fell for the second month in a row to 62.6%, the Labor Department said Friday.
Average hourly wages climbed 0.2% to $25.59. Hourly pay rose 2.5% from May 2015 to May 2016.
The government said 123,000 new jobs were created in April instead of 160,000. March’s gain was lowered to 186,000 from 208,000