DAVID GREENE, HOST:
Job growth in this country slowed to a crawl last month, according to the government's monthly employment report released this morning. Only 38,000 new jobs were added to payrolls. That is far less than expected. But despite the slow job growth, the unemployment rate fell to its lowest level since late in 2007. Now, let's try and sort this out with NPR economic correspondent John Ydstie, who is here to talk about this. Good morning, John.
JOHN YDSTIE, BYLINE: Hi, David.
GREENE: So am I right that this is mixed messages? Very slow job growth, big drop in the employment rate - what exactly is happening here?
YDSTIE: Well, the unemployment rate did fall from 5 percent to 4.7 percent - but in this case, not a good sign.
YDSTIE: Because what happened was close to half a million people dropped out of the labor force - according to this government data - and they're no longer counted as unemployed. So the unemployment rate fell not because of strong job growth but because people dropped out. Now, these government surveys can swing dramatically. And so this huge exit from the labor market may correct itself next month. And that means the employment rate could rise again in the coming months.
GREENE: Well, in terms of this low job growth number, I mean, does that tell us that there's just not a lot of hiring going on in this country at all? Is that an accurate picture here?
YDSTIE: Well, probably not, but this report clearly signals a slowdown in job growth. The numbers from March and April were revised down, so the average job growth for the past three months is only 116,000 jobs. Compare that to the average for the last year, which was about 220,000. That suggests a slowdown in hiring and probably reflects a slowdown in economic growth to below this sort of 2 percent range we've experienced for the past couple of years.
GREENE: Are we going to start using the R-word, recession?
GREENE: The economy will be heading for or no?
YDSTIE: ...I don't think so, David. Even that three-month average of 116,000 is probably low. Remember that the main numbers were skewed downward by the Verizon strike, which took over 35,000 workers off the payrolls. That strike was settled last week, and they'll be going back to work. Also, there was an unexpected drop in construction jobs in May, despite healthy growth in home building. That could correct itself. So probably - more likely, job growth is running in the range of 160 to 170,000.
GREENE: You had suggested that there might be - the fed might raise interest rates if job growth looks steady. Do these numbers make that look less likely now?
YDSTIE: I think it's off the table for June, certainly, and also less likely for July - maybe September now.
GREENE: OK, that's NPR economics correspondent John Ydstie talking about lower-than-expected jobs numbers out this morning. John, thanks a lot.
YDSTIE: You're welcome. Transcript provided by NPR, Copyright NPR.