U.S. Economy

(CN) — The U.S. economy added just 38,000 jobs in May, the fewest in more than five years, the Labor Department reported Friday.

Meanwhile, the nation's unemployment rate dropped to 4.7 percent from five percent its lowest point since November 2007, the government said.

But analysts saw dark clouds even in this seeming good news, saying it pointed to nearly a half-million unemployed Americans simply giving up looking for work. As a result, they aren't being counted as unemployed by the Labor Department.

Stocks plunged as word of the disappointing jobs report spread Friday morning, and Wall Street believes the dismal job numbers will cause the Federal Reserve to reconsider an anticipated short-term interest rate hike.

The Fed had been expected to make such a move either at its next meeting, in mid-June, or at its meeting after that, in late July.

The proportion of adults working or looking for work dropped to 62.6 percent, the government said.

And job losses occurred across several business sectors. Temporary personnel firms cut 21,000 jobs, construction firms shed 15,000 jobs, and manufacturers cut 10,000 jobs, the government said.

Compounding the bad news, hiring numbers for March and April were revised down, with job gains now just 123,000 in April, down from an initial estimate of 160,000, and March downgraded to 186,000 from 208,000.

In a statement released by the White House, Jason Furman, chairman of the Council of Economic Advisers, said the May jobs numbers were "considerably below both expectations and the pace of growth in recent months, with volatility in monthly data and a temporary strike in the telecommunications industry contributing to the disappointingly low number."

"This month's report is a reminder of the important work that remains to sustain faster growth in jobs and wages, including investing in infrastructure and job training, implementing high-standards trade agreements like the Trans-Pacific Partnership, and raising the minimum wage," Furman said.

In a separate statement, Labor Secretary Thomas Perez said, "At this point in a recovery, we expect to see trade-offs between job growth and strong wage growth. Earnings growth in May was encouraging. So far this year, average hourly earnings for private employees have increased 3.2 percent at an annual rate.

Like Furman, Perez also attributed some of the dampening of the job numbers to the just-concluded strike by 35,000 Verizon workers. The union telecom workers went back to work on Wednesday.

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