By Christopher S. Rugaber
AP Economics Writer
WASHINGTON (AP) — U.S. employers drastically slowed their hiring in May, adding just 38,000 jobs, the fewest in more than five years and a sign of concern after the economy barely grew in the first three months of the year.
The news wasn’t great for the construction industry as well, as it lost 15,000 jobs in May.
The much-weaker-than-expected figure raised doubts that the Federal Reserve will increase the short-term interest rate it controls at its next meeting in mid-June or perhaps even at its subsequent meeting in late July. Many analysts had expected an increase by July.
At the same time, the unemployment rate tumbled to 4.7 percent in May from 5 percent, the Labor Department reported Friday, its lowest point since November 2007. The rate fell for a problematic reason: Nearly a half-million jobless Americans stopped looking for work and so were no longer counted as unemployed.
“The shockingly low payrolls gain in May provides further evidence that the economy is showing clear signs of slowing,” said Laura Rosner, an economist at BNP Paribas.
In its report Friday, besides issuing the downbeat May employment data, the government downgraded its estimate of job growth for March and April by a combined 59,000.
Job gains have now averaged just 116,000 in the past three months, down sharply from an average of 230,000 in the 12 months that ended in April.
Job losses were widespread: Manufacturers cut 10,000 positions, while temporary help firms shed 21,000 jobs. Retailers, hotels and restaurants added jobs, but at a slower pace than recent months.
Construction hiring was strong earlier this year, thanks to milder winter weather. That might have pulled forward by a couple of months hiring that normally would have taken place in April and May.
Friday’s dismal jobs report was a surprise in part because most recent economic reports have been encouraging: Consumer spending surged in April. Americans ramped up purchases of autos and other big-ticket items, like appliances.
Home sales and construction have also increased. Sales of new homes reached an eight-year high in April.
AP Business Writers Seth Sutel in New York and Paul Wiseman in Washington, D.C., also contributed to this report.