The labor market cooled in May as jobs growth failed to meet analysts’ expectations, sparking concern among investors that an economic slowdown may have begun.
The U.S. economy added only 75,000 jobs in May according to data released Friday by the Labor Department, its worst showing since February and well below analyst predictions of 175,000 new positions. Jobs gains for the previous two months were also revised downward by 75,000. All in all, monthly job gains have averaged 164,000 so far this year, a drop from last year’s clip of 223,000.
Unemployment remains at 3.6 percent, a 50-year low, while wages have grown 3.1 percent since this time last year. But there are currently about 1.6 million more open positions than workers available to fill them. Given the labor shortage, analysts have predicted that the jobs-market expansion would soon begin to taper off.
Economists have also predicted the slowing economy will result in the Federal Reserve lowering interest rates in the near future, a possibility that spurred stocks higher on Friday as the jobs report was released.
Worries about the economy’s future come amid the Trump administration’s increased use of tariffs on imports from China, Mexico, and other trading partners as a negotiating tool.
President Trump recently called for a 5 percent tariff on all products from Mexico to take effect on June 10 and continue until “the Illegal Immigration problem is remedied.” The U.S. will progressively raise tariffs to 25 percent by October if Mexico refuses to take action on immigration, the White House has said.
Trump also raised tariffs from 10 to 25 percent last month on $200 billion of Chinese imports, after accusing the world’s second-largest economy of reneging on terms of a previously agreed-upon trade deal. Those tariffs came in addition to an existing 25 percent tariff on $50 billion worth of Chinese high-tech products. China has threatened retaliation, saying it will raise tariffs on $60 billion worth of American goods.