In disappointing news for the White House, Wall Street and Main Street, U.S. job gains slowed to a crawl in May and the unemployment rate moved higher, the Labor Department estimated Friday.
Nonfarm payrolls rose by a seasonally adjusted 54,000 in May. This is the smallest gain since September and a fraction of the 125,000 jobs expected by economists polled by MarketWatch. That forecast had been cut in recent days as economists grew pessimistic after a string of disappointing data this week. Just a few days ago, economists were expecting jobs growth of 175,000 jobs in the month.
The official unemployment rate increased to 9.1% in May from 9.0% in April. This is the highest unemployment rate since December. Economists were expected a slight drop in the jobless rate to 8.9%. The unemployment report adds to fears that the U.S. economy may have hit more than a soft patch and that a more protracted and dangerous downturn could be in the offing.
Stock futures sold off sharply after publication of the report, as did silver and gold. The dollar dropped against the Japanese yen.
Total payrolls were revised down by 39,000 for March and April. March’s gain was revised to 194,000 from 221,000, while April’s gain of 244,000 was revised to a gain of 232,000.
There was no sign that hiring at McDonald’s boosted payrolls. Food and drinking employment rose by 13,600 jobs in May after adding 28,000 workers in April.
Stepping back, the economy has only recovered a small portion of the more than 8 million jobs lost during the recession. Even before today’s disappointing number, the pace of job growth had not been sufficient to make a meaningful dent in the unemployment rate.