US job market experiences worst growth in five years

WASHINGTON, June 3: The U.S. economy created the fewest number of jobs in more than five years in May as employment in the manufacturing and construction sectors fell sharply, suggesting a deterioration in the labour market that could make it harder for the Federal Reserve to raise interest rates.

Underscoring the report’s weakness, employers hired 59,000 fewer workers in March and April than previously reported. While the unemployment rate fell three-tenths of a percentage point to 4.7 per cent in May, the lowest since November 200, that was in part due to people dropping out of the labour force.
“This unusual jobs report puts the Fed in a tricky position. Disappointing job creation numbers, including adverse revisions to prior monthly estimates, argue for the Fed to remain highly accommodative for now,” said Mohamed el-Erian, chief economic adviser at Allianz in Newport Beach, California.
U.S. stock index futures dropped after the data, while prices for U.S. government debt rose. Short-term interest rate futures jumped. The dollar .DXY was trading lower against a basket of currencies.
The Fed bank has signalled its intention to raise rates soon if job gains continued and economic data remained consistent with a pickup in growth in the second quarter.
Fed Chair Yellen said last week that a rate increase would probably be appropriate in the “coming months,” if those conditions were met. The U.S. central bank hiked its benchmark overnight interest rate in December for the first time in nearly a decade, according to Reuters. – IH/The Financial Express