The U.S. economy created 78,000 new jobs in May, the Labor Department reported today, about half as many as economists expected and the lowest payroll growth rate since August 2003.
Compared with recent monthly figures, in fact, May's could be an aberration. Every month since last July has seen an increase of between 120,000 and 300,000 jobs. The April number was 274,000.
The monthly average increase for the previous 12 months has been about 184,000.
"The 'economy is weakening' crew will have a field day with this report," wrote Stephen Stanley of Greenwich Capital Management in a note to clients. "But until we see two weak numbers in a row, I am absolutely unconvinced. . . . Disappointed? Definitely. Changing our big picture view? No."
Stanley suggested that usually cool weather in May slowed hiring of temporary workers and leisure industry employees who rely on springtime recreational customers.
"The slowdown in the pace of job creation" was "fairly widespread," said Paul Ashworth, of Capital Economics. "Reading too much into one month's payrolls data is always a dangerous game to play. . . ." But it conforms with other labor market data released this week - including weekly jobless claims and "this suggests to us this is more than just a statistical quirk," he said.
"The report is moderate -- it is not terrible," James Glassman, senior economist at JPMorgan Securities in New York, told the Reuters news agency. "There is nothing wrong with the economy. What it confirms is that the economy is not out of control."
Rising energy costs in particular, however, have been taking a toll on the economy, dampening consumer spending as well as overall economic output.
The unemployment rate, derived using a different methodology, was unchanged at 5.1 percent but was down from 5.6 percent a year earlier, the department said.
The number of long-term unemployed -- those without jobs 27 weeks or more -- was also unchanged.
The growth areas for employment continued to be health care and construction, according to today's report.
In healthcare, employment in hospitals and physicians' offices accounted for the gain.
In construction, the boom came in residential specialty trades compared with a slight decline for nonresidential construction.
Other sectors of the economy remained stable.
Average hourly earnings of non-supervisory workers rose by three cents to $16.03, the report said. Average hourly and weekly earnings have grown by 2.6 percent during the year and are not keeping up with inflation.
Recent figures on overall economic growth in the United States have suggested that expansion is slowing, but is still on firm ground. The country's gross domestic product, the value of all goods and services produced, rose at a solid 3.5 percent annual rate in the first three months of the year, the Commerce Department reported in May.
"This all but seals the deal on a coming cessation in Fed tightening," Sherry Cooper, chief economist at BMO Nesbitt Burns in Toronto, told the Bloomberg news service. "I'd bet the Fed raises rates, at most, two more times, leaving the fed funds rate at a maximum 3.5 percent, and maybe 3.75 percent, by year end" from the current 3 percent.
"The key number for the Fed was actually the unemployment rate and it went down and has been declining steadily," Kurt Karl, chief U.S. economist at Swiss Reinsurance Co. in New York, told Bloomberg. "Wages continue to rise and the Fed has to continue to raise interest rates. This isn't weak enough to stop them."