Hiring by US employers slowed last month to the weakest pace since 2010, clouding the economic picture and dealing a blow to the prospects for a Federal Reserve rate increase this month. Non-farm payrolls rose by a seasonally adjusted 38,000 in May, below a revised 123,000 figure for April and well below expectations for growth of about 160,000. Employers took on 59,000 fewer workers in March and April than previously reported. The unemployment rate slid to 4.7 per cent from 5 per cent but the declines were driven by people quitting the labour force, rather than buoyant hiring. In a worrying signal, the number of people working part-time because they could not find a full-time post rose by 468,000.
Stocks sold off and the dollar fell on the report, which also sent 10-year bond yields sliding from 1.7938 per cent to 1.728 per cent. The DXY dollar index fell 0.8 per cent. The latest payrolls numbers were affected by a strike by 35,000 Verizon Communications workers that began in late April and stretched through May. But even excluding that effect, the jobs report was poor and contrasted sharply with the robust gains that have been seen for much of the decade. “This is a smack in the face for the US economy,” said Diane Swonk of DS Economics. “They [the Fed] need to see a much better June number to keep July on the table … When you are losing momentum going into the meeting, that is not when you raise rates.”