Hiring Slows Sharply, Workforce Dropouts Spike

By Harriet Torry

WASHINGTON—U.S. companies hired at the slowest pace in more than five years in May and nearly half a million people dropped out of the labor force, clouding the outlook for Federal Reserve officials ahead of their policy meeting this month.

Nonfarm payrolls rose by a seasonally adjusted 38,000 in May, the weakest performance since September 2010, the Labor Department said Friday, missing the estimate of economists surveyed by The Wall Street Journal by over 100,000.

Revisions showed employers added a combined 59,000 fewer jobs in April and March than previously estimated. Together, May’s weak job growth and the revisions bring the average monthly job gains in the past three months to 116,000, a sharp slowdown from the average 219,000 growth over the prior 12 months.

“Not even a magician can take this number and make it sound good,” said Quincy Krosby, market strategist at Prudential Financial.

The unemployment rate, which is obtained from a separate survey of U.S. households, fell to 4.7% in May from 5.0% in April as fewer people looked for work. Economists surveyed by the Journal had predicted payrolls would rise by 158,000 and the unemployment rate would hold steady.

The decline in the unemployment rate was driven by 458,000 people leaving the workforce. The labor-force participation rate fell to 62.6% in May, down 0.2 percentage point from April.

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http://www.wsj.com/articles/u-s-added-only-38-000-jobs-in-may-1464957215