Underneath the hood of the May U.S. jobs report, lost positions in key sectors of the economy make the headline number look even worse.
The U.S. gained 75,000 jobs in May, falling well short of the market’s consensus forecast for 175,000. Yet six industries told the tale of how bleak the payrolls report was during the month.
The sectors of nondurable goods, retail trade, transportation and warehousing, information, government and “other services” (which include repair and maintenance, and other areas) all lost jobs, underscoring how broad the weakness in the report actually was.
The biggest loser was government, where 15,000 job losses outpaced even those seen in the beleaguered retail sector. A 19,000 shedding of positions at the state and local level were only partly offset by a 4,000 gain in federal hiring.
Changes in the government sector represent a swing of 34,000 lost positions, after the U.S. economy added 19,000 government jobs in April. Now, most of that progress is gone.
Another significant trend continued in retail trade, which includes everything from car dealers to health and personal care stores.
The retail industry lost 7,600 jobs in May, which actually represented a better outlook than in March or April, when the industry lost 14,800 and 13,600 jobs, respectively. All told, the retail trade industry has shed over 160,000 jobs since January 2017.
The report comes in the wake of news of escalating trade wars with Mexico and China that have spooked markets, and undermined the growth outlook.
According to some Wall Street economists, the grim report “provides further evidence that the end of the business cycle is upon us,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
“Economic activity is slowing,” he added.
As the United States approaches 10 years of fairly sustained economic growth, though, the May jobs report only serves to strengthen fears, especially in the six sectors losing jobs, that the economy could be showing early signs of moving back into a recession state.
Not everyone is panicked yet, though. “The average pace of job growth over the last three months (at 151,000) is hardly alarming,” Brian Coulton, chief economist at Fitch Ratings, said.
“It speaks to a slowdown in the domestic economy but there’s no suggestion of demand falling off a cliff,” he added.
Calder McHugh is an Associate Editor at Yahoo Finance. Follow him on Twitter: @Calder_McHugh.
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