The prior two months' payroll gains were revised lower, the average workweek was flat, the monthly gain in average hourly earnings moderated, temporary hiring fell for the fourth time in five months, and the labor force participation rate fell back to a five-month low.

“News was not good for real estate either, as construction employment posted the biggest loss in May since the end of 2013, and the small gain in April was revised to a modest loss,” he concluded.

A Different Interpretation

Indeed this latest set of numbers contribute to the growing unease that something is amiss in the US economy. But some nuance is required as well as analysts and industry observers set about dissecting the report.

For example, the loss posted by the construction sector that Duncan cited? A separate analysis by the Associated General Contractors of America offers a different take on the issue. It said that rising industry pay and plunging unemployment suggest contractors would be hiring more workers if they were available and that worker shortages may be reaching the point where they undermine the sector's growth.

“Although construction employment slipped in April and May, the industry has added workers in the past year at double the rate of the overall economy,” said Ken Simonson, the association's chief economist in a prepared statement. ”Average pay in construction is rising faster than in the rest of the private sector, and the number of unemployed construction workers was at the lowest May level in 16 years. These facts support what contractors tell us: they have plenty of work but are struggling to find qualified workers to hire.”

Construction employment totaled 6,645,000 in May, a drop of 15,000 from April, according to the Labor Department, which also revised the change from March to April to a 5,000-employee decline from an initial estimate of a 1,000-job gain. But even with the back-to-back decreases, industry employment increased by 219,000, or 3.4%, compared to a year ago, AGC said.

A New Consideration for the Fed

All that said, these numbers — however they may be interpreted — are certain to give the Federal Reserve Bank's Federal Open Market Committee pause as it preps for its next meeting, which will be held in the middle of this month.

As Duncan put it, the new jobs report increases the uncertainty surrounding the uneven performance of the domestic economy and brewing risks abroad, such as this month's Brexit vote. “Encouraging signs seen in consumer spending and home sales at the start of the second quarter are now tempered by what appears to be a significant loss of momentum in the labor market.”

WASHINGTON, DC—The Bureau of Labor Statistics delivered a shocker Friday morning. There were only 38,000 jobs created in May, far below economists' expectations of 162,000 jobs. The Labor Department also reported that the unemployment rate dropped to 4.7%.

Labor Department officials suggested that the reason for May's poor performance was due to the striking Verizon workers — an explanation that while true was immediately shot down as completely beside the point.

“Even after accounting for the striking Verizon workers, private job gains still remain at a paltry 60,000, a puzzling downshift from their recent trend,” Fannie Mae's Chief Economist Doug Duncan said in a prepared statement.

Duncan also rightly noted that the report was rife with bearish factoids.

The prior two months' payroll gains were revised lower, the average workweek was flat, the monthly gain in average hourly earnings moderated, temporary hiring fell for the fourth time in five months, and the labor force participation rate fell back to a five-month low.

“News was not good for real estate either, as construction employment posted the biggest loss in May since the end of 2013, and the small gain in April was revised to a modest loss,” he concluded.

A Different Interpretation

Indeed this latest set of numbers contribute to the growing unease that something is amiss in the US economy. But some nuance is required as well as analysts and industry observers set about dissecting the report.

For example, the loss posted by the construction sector that Duncan cited? A separate analysis by the Associated General Contractors of America offers a different take on the issue. It said that rising industry pay and plunging unemployment suggest contractors would be hiring more workers if they were available and that worker shortages may be reaching the point where they undermine the sector's growth.

“Although construction employment slipped in April and May, the industry has added workers in the past year at double the rate of the overall economy,” said Ken Simonson, the association's chief economist in a prepared statement. ”Average pay in construction is rising faster than in the rest of the private sector, and the number of unemployed construction workers was at the lowest May level in 16 years. These facts support what contractors tell us: they have plenty of work but are struggling to find qualified workers to hire.”

Construction employment totaled 6,645,000 in May, a drop of 15,000 from April, according to the Labor Department, which also revised the change from March to April to a 5,000-employee decline from an initial estimate of a 1,000-job gain. But even with the back-to-back decreases, industry employment increased by 219,000, or 3.4%, compared to a year ago, AGC said.

A New Consideration for the Fed

All that said, these numbers — however they may be interpreted — are certain to give the Federal Reserve Bank's Federal Open Market Committee pause as it preps for its next meeting, which will be held in the middle of this month.

As Duncan put it, the new jobs report increases the uncertainty surrounding the uneven performance of the domestic economy and brewing risks abroad, such as this month's Brexit vote. “Encouraging signs seen in consumer spending and home sales at the start of the second quarter are now tempered by what appears to be a significant loss of momentum in the labor market.”