Dollar falls as US economy adds just 75,000 jobs in May and wage growth slows
The US economy created a lower-than-expected 75,000 jobs last month and wage growth eased as Donald Trump’s trade war with China continued to bite.
Job creation slowed sharply in May from the 224,000 new jobs recorded the previous month, falling far below estimates of 175,000.
Read more: European stock markets bleed red as Trump takes trade war to Mexico
Average hourly earnings rose 3.1 per cent from a year earlier, also falling below expectations.
The US dollar fell to two and a half-month lows, dropping 0.4 per cent against the Japanese yen to 107.99 yen.
The pound gained 0.5 per cent against the dollar, climbing to $1.2759.
“While we were expecting jobs growth to slow down this time, few could have predicted such weak payroll numbers,” ING economist James Smith said.
“The poor reading only cements market expectations for Fed rate cuts ahead,” he added.
Monthly job gains have averaged 164,000 so far this year, according to US Labor Department figures, more than double the figures for May.
But the US unemployment rate remained steady at a 50-year low of 3.6 per cent.
Ongoing trade tensions between the US and China, as well as Trump’s fresh threat of tariffs on Mexican goods have painted a pessimistic economic picture of late, compounded by today’s jobs data.
The disappointing figures sent the yield on the 10-year Treasury to its lowest level since September 2017, while the dollar fell 0.41 per cent to a two-and-a-half month low against the Japanese yen.
Read more: Trump meets FTSE business leaders over breakfast
“The dollar was sold and bonds bid as the latest nonfarm payrolls report grossly missed expectations,’ Neil Wilson, analyst at Markets.com said.
“One swallow does not make a summer though, and a poor print every few months does not mean the US economy is on the cusp.