Millions Of People Looking For Work Got Discouraging News

Follow CBSMIAMI.COM: Facebook | Twitter 

MIAMI (CBSMiami) -- For the millions of Americans looking for work, there was discouraging news from the labor market.

Employers put the brakes on hiring last month. The labor department reports the economy added just 38,000 jobs in May. That was drastically short of what had been expected.

The slowdown was widespread with cuts in manufacturing, construction and telecom. The unemployment rate dropped to 4.7 percent but that was because about half a million people stopped looking for work and were no longer officially counted as unemployed.

May's job growth was the slowest in more than five years and investors reacted quickly. The stock market dropped right from the opening bell.

The unemployment numbers are also giving the Federal Reserve something to think about. Policy makers had been considering raising interest rates in the next month but a shaky labor market may postpone those plans.

By other measures, the economy had been on the upswing. Consumer spending has increased, along with home sales and factory activity but dismal job growth could be a red flag that the recovery has stalled.

The Labor Department also revised their reports for March and April, indicating job gains were actually smaller than originally estimated.