Investing.com – The U.S labor market showed signs of fatigue as the economy created much fewer jobs than expected, although the unemployment rate dropped more than expected, according to official data released on Friday.
Non-farm payrolls rose only 38,000 in May, compared to the rise of 123,000 in April that was revised from the initial reading of 160,000. The data missed the consensus estimate for the creation of 164,000 jobs.
The jobless rate fell to 4.7%, below forecasts for a decline to 4.9% and compared to the prior 5.0%.
Average hourly earnings rose month-on-month by 0.2%, coming in line with expectations. April's increase was revised up to 0.4%, from the initial reading of 0.3%.
The participation rate also decreased slightly to 62.6%, from the prior 62.8% in April.
Additionally, the private sector created fewer of the new job contracts than expected in May with a total of 25,000, compared to consensus expectations of 152,000. April’s number was revised down to 130,000 private nonfarm payrolls, from the prior 171,000.
Government payrolls increased by 13,000, compared to the destruction of 7,000 public jobs that occurred in April, revised from an initial decline of 11,100.
Furthermore, the average weekly hours remained unchanged at 34.4. Economists had expected the number to remain at April’s initial reading of 34.5
U.S. futures moved lower after the publication and, at 12:37GMT or 8:37AM ET, the blue-chip Dow futures lost 0.32%, S&P 500 futures dropped 0.37% and the Nasdaq 100 futures fell 0.30%. Futures had been trading flat before the data.
The dollar weakened after the release, with the U.S. Dollar Index trading at 94.72, compared to 95.49 earlier. EUR/USD traded at 1.1256, from 1.1156 before the release, USD/JPY traded at 107.93, from 108.85, and GBP/USD was at 1.4496, compared to the previous 1.4433.