Solid US jobs report could allay fears of weakening economy

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Hiring slowed sharply last month, as US employers added just 75,000 jobs. The Fed says it's "closely monitoring" the effect of trade wars on the economy, and many economists are predicting a rate cut "to stave off a dramatic slowdown".

In the first five months of this year, hiring has averaged 164,000 a month, a solid pace that is enough to lower the unemployment rate over time.

The Labor Department report, which sometimes can mention special factors that affected jobs or survey responses, didn't cite any such as weather for the latest month. The unemployment rate is expected to remain at a almost 50-year low of 3.6 percent, according to data provider FactSet. Manufacturing payrolls increased by 3,000 last month, after gaining 5,000 positions in April.

The labour department also reported that employment gains for March and April combined were 75,000 less than previously reported. The unemployment rate is expected to remain at a almost 50-year low of 3.6%, according to data provider FactSet.

The technology-heavy Nasdaq, which has powered the last few years of the decade-long bull market, had its own problems as Washington politicians on both sides of the aisle began calling for the investigation and regulation of the FAANG companies: Facebook, Amazon, Apple, Netflix and Google parent Alphabet.

The economy is showing signs of sluggishness just as the current expansion has reached its 10th anniversary. Young believes that the Federal Reserve will cut interest rates to jumpstart USA economic growth due to the indicators in the report.

Wages rose 3.1% from a year earlier, down slightly from last month's gain of 3.2%.

- Economists in Bloomberg's survey had projected 3.6% unemployment and annual wage gains at 3.2%. "Manufacturing did slow over the last few months ... but attributing that to trade right now is tricky because Mexico just started and the China negotiations did only hit a roadblock in May".

Employers in the construction sector hired 4,000 workers in May. Employers created 75,000 new jobs in May, which is mediocre and not alarming in itself. A category that includes telecom, publishing, and media shed 5,000 jobs.

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The odds of a rate cut rose immediately on the news, with futures placing the chance of a Federal interest rate cut at 79 percent.

Last month, he increased tariffs on $200 billion in Chinese imports from 10% to 25%.

The higher costs from the import taxes - and the potential for more - are causing some companies to scale back plans for spending, investment and expansion. Orders for machinery and equipment fell 1% in April.

"U.S. manufacturers, particularly automobile manufacturers, are also vulnerable to the escalating trade disputes", Julia Pollak, labor economist at ZipRecruiter, said in an email. A separate report from the Fed showed that factory output fell 0.5 percent in April.

The Fed has hinted at a possible rate cut earlier this week, sending stocks up, despite some worries over the ongoing U.S.

"We think that their hopes are misplaced, which is the key reason we expect the S&P 500 to fall sharply before the year is out", he said in a note on Friday.

Fed Vice Chair Richard Clarida said last month that the central bank had cut rates preemptively, or made an "insurance" cut.

In April, payrolls grew by a robust 263,000 while retail sales and manufacturing sent mixed signals.

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