The Most Important Market Development of This Week

US created 38,000 jobs in May vs. 162,000 expected. 

Investors’ reactions to Friday’s anaemic employment numbers in the U.S. — the worst labor report since September 2010. The timing of the release meant that Asian and European markets didn’t really get to respond. The question, as ever, is whether the Fed will now wait to raise rates again, and what the implications for currencies are. The dollar plunged against major currencies after the release.

According to the Washington Post: The U.S. job market slowed dramatically in May, according to government data released Friday, adding just 38,000 jobs despite other signs that the economy was picking up steam after a weak start to the year.

Job growth in May was the weakest since 2010, when the country was still clawing back from the Great Recession and thousands of workers were joining the ranks of the unemployed. The Labor Department also lowered its estimate of hiring in March and April by 59,000 jobs.

In addition, the unemployment rate fell from 5 percent to 4.7 percent. However, the decline was primarily due to a contraction in the labor force, rather than workers finding jobs.

“This just does not square with all the other things we’re seeing in the economy,” said Gus Faucher, chief economist at PNC Financial Services Group. “This is no reason to panic, and I still think the fundamentals remain solid.”

Estimates of overall economic growth this spring range from 2.5 percent to 3 percent, substantially higher than the 0.8 percent pace this winter as the slowdown in China, plunging oil prices and a strong dollar crimped exports and business investment and rattled financial markets around the globe. The United States' recovery appears to have pulled through the turmoil, but the disappointing jobs report suggests it was left with some scars.