Private payroll growth accelerated only slightly last month and claims for jobless benefits rose last week, suggesting the U.S. labor market recovery was stalling after a strong performance early in the year.
Other data on Thursday showed economic growth in the first quarter was a bit softer than initially estimated, with businesses restocking shelves more slowly than previously thought and government spending declining more sharply.
“It shows we’re in a lackluster period in the economy right now,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.
Private employers created 133,000 jobs in May, payrolls processor ADP said. That was below economists’ expectations for 148,000 jobs.
The report comes ahead of Friday’s closely watched employment report for May, which is expected to show that nonfarm payrolls increased 150,000, up from a paltry 115,000 in April. Job creation accelerated between December and February as the economy got a boost from an unusually warm winter.
“This number could have some weather payback in it, but I think basically it confirms and reinforces the notion that there was a sharp deceleration of employment in the springtime months,” Joel Prakken, chairman of Macroeconomic Advisors, told CNBC’s “Squawk Box.”
“It’s not particularly surprising given the recent weakness in the macroeconomic data, but it’s certainly disappointing and well short of what we need to see the national unemployment rate fall on a consistent basis.”
While economists have largely shrugged off the recent cooling in the labor market as payback for strong gains during winter, there are signs of fundamental weakness.
Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 383,000, a Labor Department report showed. Claims have now risen in seven of the last eight weeks.
Another report showed the number of planned layoffs at U.S. firms rose to an eight-month high in May as computer maker Hewlett-Packard said it would cut about 8 percent of its workforce.