U.S. employers pulled back on hiring in May by adding only 138,000 jobs. Hiring was still enough to help keep pushing unemployment lower.
The Labor Department said Friday that the unemployment rate fell to 4.3 percent from 4.4 percent. But the rate declined mainly because people stopped looking for work last month and so were no longer counted as unemployed.
The government’s report suggested that eight years into the recovery from the Great Recession, job growth may be slowing after a long period of robust gains. Besides the hiring pullback in May, the government on Friday revised down its estimate of job growth in March and April by a combined 66,000. Job gains have averaged 121,000 over the past three months, compared with an average of 181,000 over the past 12 months.
Employers are now choosing from among a smaller pool of job applicants, and some are having trouble finding people with the skills they need. Average hourly earnings have risen a middling 2.5 percent over the past year.
Still, most analysts think job growth is still solid enough for the Federal Reserve to feel confident enough to raise interest rates again when it meets in two weeks.
And there were some bright spots in May’s jobs report. Restaurants and health care companies posted solid gains. Food services added 30,300 workers, health care 24,300. Construction added 11,000. As energy prices stabilize somewhat, the mining sector — which includes oil, natural gas, coal and metal ore — added 6,600 jobs last month.
But manufacturers, retailers and governments lost workers last month.
Governments shed 9,000 workers, with the losses concentrated at the state and local level. Manufacturers let go of 1,000 workers. Retailers trimmed their ranks by 6,100 jobs.
Despite the slowdown in job growth, the U.S. economy is running neither too hot nor too cold, with growth holding at a tepid but far from recessionary 2 percent annual rate. Few economists foresee another downturn looming, in part because the recovery from the recession has been steady but grinding, with little sign of the sort of overheated pressures that normally trigger a recession.
The government’s monthly jobs report produces a net gain by estimating how many jobs were created and comparing that figure with how many it estimates were lost. If hiring maintains its current pace, it would exceed population growth, and the unemployment rate should eventually fall even further below its current 4.3 percent, a level associated with a healthy economy.
Still, the jobs report produces several different measures of unemployment. The broadest gauge includes not only the officially unemployed but also part-time workers who would prefer full-time jobs and people who want a job but aren’t actively looking for one and so aren’t counted as unemployed.
Known as the “U-6” rate, this measure is one of the favorite metrics for Trump administration officials. The U-6 has declined since January to 8.4 percent, an encouraging sign that jobless people who had given up hope of working are now being hired. The falling U-6 points to a relatively healthy job market.
But the influx of job seekers can also inflict a drag on pay growth. As more people start seeking jobs, employers begin to have less incentive to raise pay. It’s only when employers face a shallow pool of job applicants that they tend to feel compelled to raise pay in hopes of hiring people who fit their needs.
Annual growth in average hourly earnings has been so-so in recent months. And whatever meaningful pay raises that exist are going disproportionately to managers and supervisors.
Many of the jobs that have been added over the past year are in the generally lower-paying leisure and hospitality industry — hotels, restaurants and amusement parks.
The Trump administration has designated the pace of hiring for good-paying skilled jobs in construction, manufacturing and mining as among the categories it monitors for economic health. Hiring in those three sectors has been comparatively sluggish over the past year.