Despite the weaker than expected job growth, the unemployment rate edged down to 4.3% in May from 4.4% in April. Still, the rate fell in part because some unemployed people stopped looking for work and are no longer considered unemployed. But as May's numbers show, not all of them are finding jobs; some are giving up on their search.
The unemployment rate for whites declined slightly to 3.7 percent in May. Meanwhile, better-paying work in fields from construction to health care continues to expand, which could support firmer wage growth this year.
While last month's job gains could still be sufficient for the Federal Reserve to raise interest rates this month, the modest increase could raise concerns about the economy's health after growth slowed in the first quarter.
May's job growth was down from 174,000 the previous month.
Mining, quarrying, and oil and gas extraction added 7,000 jobs in May, bringing a total of 47,000 jobs since the October 2016 low.
In May, employment in professional and business services continued to trend up (+38,000).
Construction payrolls rose 11,000 last month. Employment in food services and drinking places also showed increases of 30,000. Retail payrolls are a wild card as department store operators like J.C. Penney Co Inc JCP.N , Macy's Inc M.N and Abercrombie & Fitch ANF.N struggle against stiff competition from online retailers led by Amazon AMZN.O .
Despite the headline miss in May, job creation last month was above the three-month average of 121,000 jobs.
United States employers added fewer jobs than expected in May, but the unemployment rate dipped further as the economy headed toward full employment.
The Labor Department said Friday that the unemployment rate fell to 4.3 percent from 4.4 percent.
Average hourly earnings rose 0.2 percent for the month, and are up 2.5 percent for the year, but this more or less keeps pace with inflation, with the Consumer Price Index for urban consumers also up 2.2 percent over the 12-month period.
US stock futures pointed to a stronger start on Wall Street, perhaps a signal the Federal Reserve won't be aggressive in making interest-rate hikes. The two forces have more or less offset over the past year, with the participation rate bouncing around but not really moving either up or down.
Analysts described the data as disappointing. "That's forcing them to increase compensation to stay competitive and hire temporary workers, but they are still having a hard time increasing prices to absorb the additional costs". That figure, known as the U-6 rate, dropped to 8.4 percent in May, and Cohn noted it is down a full percentage point since Trump took office in January.
David Berson, chief economist for Nationwide, was much more negative. The U-6's three-month drop is the biggest since 2014.
"Fed officials have noted the weakness in inflation numbers of the past few months but have been willing to discount it as temporary", said Michelle Meyer, senior USA economist at Bank of America Merrill Lynch.
But the fractious political landscape may derail the Fed's plan. However, segments of the economy that affect commercial space absorption still had reasonably good job creation. Last month's decline came as people left the labour force. But the tiny gains that had been made were knocked off this month, suggesting that fewer dropouts were dropping back in. Annual wage gains have stayed near the 2.5% pace since late 2015, despite a steady decrease in the unemployment rate. That is far lower than previously reported, but sufficient to provide jobs to a growing population, if not to draw in dropouts. "It's inevitable that we would start to see a slowdown in the payroll numbers".
Economists surveyed by Bloomberg expected 180,000 job gains. Here's what a Fed rate hike means for you.