The May jobs report is out, and it is a huge miss. On Friday morning, the Labor Department reported that the U.S. economy added just 38,000 jobs, while the unemployment rate dropped to 4.7 percent.
Monthly employment growth averaged 192,000 jobs added for the first four months of 2016, which was already a slowdown compared to 2015. Economists were expecting a modest 158,000 jobs to be added last month, meaning that May’s disappointing jobs report will almost surely be read as a sign of a slowing economy. It is the smallest number of jobs added in a monthly jobs report since 2010.
One thing economists were already anticipating is that this particular jobs report would be slightly distorted by the recent strike at Verizon. Roughly 35,000 Verizon workers were on strike in the month of May, but they returned to work this week after an agreement between Verizon and its union was reached. While on strike, these workers were counted as unemployed.
Still, the May jobs report is very disappointing on a few fronts. In it, both March and April’s numbers were revised down. Combined, these revisions mean that March and April added 59,000 fewer jobs than originally estimated, bringing the three-month average down to 116,000 jobs added per month.