Against the backdrop of worsening trade conflicts, USA job creation slowed sharply in May, with hiring drying up in major industries and wage growth stagnating, the Labor Department reported Friday. But the unemployment rate has remained at 3.6 percent, which is the lowest since December 1969, according to the Bureau of Labor Statistics (BLS).
The monthly snapshot from the Labor Department suggests businesses are increasingly cautious in the face of the Trump administration's ongoing trade wars. The job gains last month were the fewest since February. Jobs gains for the previous two months were also revised downward by 75,000.
A weakening economy also could unnerve Republicans ahead of hotly contested elections in 2020. Some of it's self-inflicted.
On the corporate front, Barnes & Noble closed 11% higher after the Wall Street Journal reported the retailer was in the process of being acquired by Elliot Management, while Zoom Video shares shot up 18% during the session after announcing better than expected earnings overnight. The Standard and Poor 500 and Dow Jones Industrial Average indexes were up more than one percent on June 7.
The Russell 2000 added 48.90 points, or 3.3%. Last month, he increased tariffs on $200 billion in Chinese imports from 10% to 25%.
Last week, Trump said he would impose a tariff on all goods from Mexico in a bid to force authorities in that country to stop immigrants from Central America from crossing the border into the United States.
"Today's report makes a cut more likely, and supports our view that the trade tensions will ultimately slow growth enough for the Fed to respond in September and December with cuts", said Joseph Song, an economist at Bank of America Merrill Lynch in NY. An index of service activity released on Wednesday showed accelerating growth.
Still, economists had expected 185,000 jobs added in May, so 75,000 fell far short of those expectations.
"I don't think it's possible to overstate how integrated the North American manufacturing process is", Quinlan said. Officials at the talks have indicated that protocols around sending asylum seekers to Mexico or other third-party countries while their US claims are processed are also part of the mix. So Ford's F-150, for example, is 15 percent Mexican made. Fiat Chrysler and General Motors each assemble about 25 percent of their cars sold in the U.S.in Mexico; for Toyota and Hyundai, the number is just 11 percent. U.S. Treasury prices rallied, while the dollar dropped against a basket of currencies.
Greg Daco, chief US economist at Oxford Economics, called the May jobs report "disappointing".
"Are we back to rooting for bad economic data?" Unless more people who are on the sidelines can be lured back into the workforce, it will be hard to maintain a robust pace of hiring.
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