Why The May Jobs Report Should Be 'Taken With A Grain Of Salt'

The U.S. economy added only about 38,000 jobs in May, its lowest monthly job growth number since fall of 2010. The unemployment rate fell to its lowest level since before the Financial Crisis, coming in at 4.7 percent. However, the 38,000 jobs added were well short of analyst expectations of roughly 155,000.

What does the weak jobs number mean for investors, the U.S. economy and the potential for a June interest rate hike?

According to RSM US LLP Chief Economist Joe Brusuelas, investors shouldn’t read too much into the low number.

“This report strikes us as more noise than signal and we anticipate that employment growth will resume at [a] stronger pace, albeit one that is roughly in line with the six month average of 170,000 in contrast with the 12 month average of 205,000,” Brusuelas said in an email.

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Looking ahead to the June Fed meeting, Brusuelas believes the weak May jobs report may have pushed the FOMC off the fence when it comes to a June rate hike.

“The best that could be said about this jobs report is that the Fed will likely push back its plans to hike the federal funds rate [until] later this year rather than a summer increase,” Brusuelas predicts.

For now, Brusuelas urges investors to take the May report “with a grain of salt” considering the 35,000 striking Verizon Communications Inc. VZ workers and the roughly 73,000 workers who were unable to work due to unusually bad weather.

The SPDR S&P 500 ETF Trust SPY is down 0.3 percent following the report.

Disclosure: the author holds no position in the stocks mentioned.