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US Stocks Surge After Dismal Nonfarm Payrolls Numbers Stock Rate-Cut Bets

US Stocks Surge After Dismal Nonfarm Payrolls Numbers Stock Rate-Cut Bets

Last month's slowdown in job gains, however, probably understates the health of the labor market as measures such as weekly applications for unemployment benefits and the Institute for Supply Management's services employment gauge have suggested underlying strength. It noted that unemployment remains at a historically-low 3.6 percent, or just under 6 million Americans. The jobless rate was partly pushed down by workers dropping out of the labour force over the last four months. Job gains for March and April were also revised downwards by a total of 75,000.

The disappointing jobs numbers reinforced the view that the Federal Reserve will be quick to lower interest rates.

"Economic growth is clearly slowing, as indicated by the slower pace of job growth in May, downward revisions in prior months, and a leveling out of wage growth", said Mike Fratantoni, chief economist for the Mortgage Bankers Association.

The economy is showing signs of sluggishness just as the current expansion has reached its 10th anniversary.

But economists and business leaders have warned that escalating trade tensions threaten to undermine the economy, which is set to mark a record decade of expansion next month.

Consumers have been cautious about spending, and companies are scaling back their investment in high-cost machinery and equipment. Wages rose by an average of 3.1 percent compared with a year earlier. That was the smallest annual gain since September. The average workweek was unchanged at 34.4 hours last month.




Manufacturing employment rose by only 3,000 new jobs in May, signaling softness in the sector tied to trade tensions and slowing global economic growth.

Employers in the construction sector hired 4,000 workers in May.

Automakers are cutting jobs and production as United States sales have slowed. Retailers shed workers for the fifth straight month as stores struggle with online competition. Federal, state and local governments cut 15,000.

Harris also noted that "BLS [Bureau of Labor Statistics] conducted its survey before Trump started hurling threats at Mexico". The president announced late Friday that he is suspending a plan to put a 5% tariff on Mexican exports after his administration struck a deal with Mexico to stem illegal migration.

Meanwhile, Trump has also announced a 5 percent tariff on imports from Mexico, effective June 10, in an attempt to make the trade partner respond more vigorously to the growing stream of migrants who travel from Central America through Mexico and enter the US illegally. Orders for machinery and equipment fell 1 percent in April. A strong dollar, which makes USA goods costlier overseas, has also slowed the production and export of manufactured goods. The slowdown is sparking fears the USA trade war is starting to ripple through the economy.

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