Job growth continued to slow in May amid economic uncertainty

The U.S. economy added jobs in May at a slower pace than in the past two months as uncertainty over the direction of trade, tax and monetary policy caused employers to pull back on hiring.

The Labor Department on Friday reported that employers added 139,000 jobs in May. That figure was slightly above the estimate of economists polled by LSEG, who projected 130,000 jobs added — though it was cooler than the initial report of 177,000 jobs added in April or the 185,000 jobs gained in March.

The unemployment rate was 4.2%, unchanged from the past two months and in line with the LSEG estimate.

Job gains in the past two months were both revised, with job creation in March revised down by 65,000 from a gain of 185,000 to 120,000; and April job gains were downwardly revised by 30,000 from a gain of 177,000 to 147,000. Taken together, employment in March and April was 95,000 lower than previously reported.

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Private sector payrolls grew by 140,000 in May — well above the 120,000 estimated by LSEG.

Government payrolls declined by 1,000 jobs in May across all levels of government. The federal government shed 22,000 jobs, leaving the sector down 59,000 jobs since January. The Bureau of Labor Statistics noted that workers on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey. Local government added 21,000 jobs in May, while state government employment was unchanged.

The manufacturing sector shed 8,000 jobs in May, a deeper decline than the 5,000 that was projected by LSEG economists.

Healthcare employment added 62,200 jobs in May, a faster rate than the average monthly gain of 44,000 over the last year. Job gains were focused in hospitals (+29,900), ambulatory healthcare services (+28,700) and skilled nursing care facilities (+6,300).

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Employment in the leisure and hospitality sector rose by 48,000 in May, with the bulk of the gains in food services and drinking places (+30,200). May's gains were well above the 12-month average of 20,000 jobs added.

Social assistance employment rose by 16,100 jobs in May, with that growth occurring in individual and family services.

The labor force participation rate declined by 0.2 percentage points to 62.4% in May.

The number of people considered to be long-term unemployed, defined as being jobless for 27 weeks or more, decreased by 218,000 to 1.5 million. The long-term unemployed accounted for 20.4% of all unemployed people in May.

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There were 4.6 million workers who were employed part-time for economic reasons in May, a figure which was little changed from April. These individuals would have preferred full-time employment but were working part-time due to a reduction in hours, or they were unable to find full-time jobs.

Multiple jobholders decreased by 283,000 in May and represented 5.3% of the labor force, a figure which has been little changed over the last year.

"While the U.S. job market continued to add a decent number of jobs in May, it's notably cooler than it was even a few months ago, and continues to soften — to the point where there's not much room for further slowdown before unemployment meaningfully starts to rise," said Cory Stahle, economist at the Indeed Hiring Lab.

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"Large downward revisions from prior months also took some of the shine off of unexpectedly strong data from earlier this year. This isn't a bad report, per se, but there are clear signs of erosion just below the surface that may not be apparent just by looking only at the headline numbers," Stahle added.