WASHINGTON • US employers added the fewest workers in three months and wage gains cooled, suggesting broader economic weakness and likely boosting calls for a Federal Reserve interest rate cut as President Donald Trump's trade policies weigh on growth.
Payrolls rose 75,000 last month after a downwardly revised 224,000 advance the prior month, said a United States Labour Department report yesterday. The rise missed all estimates in Bloomberg's survey calling for 175,000.
The jobless rate held at a 49-year low of 3.6 per cent while average hourly earnings climbed 3.1 per cent from a year ago, less than projected.
The dollar and Treasury yields fell as the data signalled the labour market was facing new pressures even before Mr Trump threatened tariffs on Mexican goods, in addition to proposed higher levies on Chinese imports.
Retail sales, factory output and home purchases have shown the economy struggling this quarter after better-than-expected growth in the first three months of the year. "It definitely looks like we've downshifted in the pace of job growth," said Mr Michael Feroli, chief US economist for JPMorgan Chase & Co. "Overall, it's a disheartening report, particularly since you may have some trade effects there, but a lot of the trade tensions have escalated" since the reference period for the Labour Department's surveys in the middle of the month, he said.
Fed policy makers have described the economy as solid, though recent remarks from chairman Jerome Powell signalled openness to lower rates if needed. St Louis Fed president James Bullard, who votes on policy this year, this week became the first official to indicate likely support for a rate cut; others are waiting for more data.
As the world's largest economy nears its longest expansion next month, the employment report may amplify rhetoric that Fed rate cuts are needed to support growth.
Revisions cut 75,000 jobs from the prior two months, bringing the three-month average to 151,000. Chief US economist Tom Porcelli at RBC Capital Markets in New York said: "This number is just going to feed the narrative of the Fed imminently cutting rates. We think that's still incredibly premature."
Contracts on the S&P 500 pushed higher soon after the jobs data was released, as bulls speculated the figures will lead to a cut and prompt an easing of trade tensions with China and Mexico. The Trump administration yesterday said it would delay tariffs on some Chinese goods by a week.
TD Ameritrade's chief market strategist J.J. Kinahan said: "I guess that those that really, really want an interest rate cut are happy. But think about the reason why you are happy - you are happy because less people are employed... But it would certainly make the case the Fed would have to look at cutting rates."
BLOOMBERG, WASHINGTON POST, REUTERS