So much for “rip-roaring” growth, as ADP’s Mark Zandi predicted yesterday. The official jobs report from the Bureau of Labor Statistics shows that the US economy only added 138,000 jobs in May, a maintenance level at best. The unemployment rate edged slightly down to 4.3%, which would be the best in 16 years, but that comes with a significant caveat:

Total nonfarm payroll employment increased by 138,000 in May, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and mining.

The unemployment rate, at 4.3 percent, and the number of unemployed persons, at 6.9 million, changed little in May. Since January, the unemployment rate has declined by 0.5 percentage point, and the number of unemployed has decreased by 774,000.

That’s not the only number that decreased, either. According to the Household Survey, the labor force dropped by 429,000, and the number of employed Americans dropped by 233,000 — far more than the number of jobs added in the Establishment Survey. Key indicators of population engagement also retreated:

The labor force participation rate declined by 0.2 percentage point to 62.7 percent in May but has shown no clear trend over the past 12 months. The employment-population ratio edged down to 60.0 percent in May. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.2 million in May. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

The unemployment rates all base their calculations to some extent on the size of the workforce as a denominator. The U-3 rate compares it to just the unemployed still seeking work, so a drop in the workforce will create a lower U-3. To some extent, that’s also true of the U-6 rate, which looks at underemployment as well as unemployed, but still uses the workforce total as the denominator. That’s why the U-6 rate dropped by two tenths of a point to 8.4% even with the weak jobs-added numbers.

On top of these weak numbers, BLS revised the previous two months downward as well:

The change in total nonfarm payroll employment for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 121,000 per month.

That’s not rip-roaring growth, and barely qualifies as growth at all. As I explained in yesterday’s ADP report analysis, we need about 121,000 jobs added a month just to keep up with population growth at last year’s level of expansion and current employment-population ratios. Furthermore, wage and hour growth appears to have slowed down as well after a few good months, which would follow from a lack of jobs growth.

The AP’s Josh Boak sounds an optimistic note about the report:

U.S. employers pulled back on hiring in May by adding only 138,000 jobs. Hiring was still enough to help keep pushing unemployment lower.

The Labor Department said Friday that the unemployment rate fell to 4.3 percent from 4.4 percent.

Hiring in the months of April and March were revised downward by a combined 66,000. Job gains have averaged 121,000 over the past three months, a deceleration from an average of 181,000 over the past 12 months.

Average hourly earnings have risen a middling 2.5 percent over the past year.

It wasn’t the hiring that pushed the U-3 or U-6 unemployment rates lower, though; it was the exodus from the workforce. Reuters seems to have captured the essence of this report more clearly:

U.S. job growth slowed in May and employment gains in the prior two months were not as strong as previously reported, suggesting the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent.

Nonfarm payrolls increased 138,000 last month as the manufacturing, government and retail sectors lost jobs, the Labor Department said on Friday. March and April data was revised to show 66,000 fewer jobs created than previously reported. May’s job gains marked a sharp deceleration from the 181,000 monthly average over the past 12 months. …

But persistently sluggish wage growth could cast a shadow on further monetary policy tightening. Average hourly earnings rose four cents or 0.2 percent in May after a similar gain in April.

That left the year-on-year increase in wages at 2.5 percent.

The tepid average hourly earnings reading comes as annual inflation rates have retreated in recent months. But with the labor market expected to hit full employment this year, there is optimism that wage growth will accelerate.

Well, maybe, but the tepid wage growth and the relatively low engagement-population numbers suggest that we’re not getting that close to “full employment.” The slowdown in job creation also suggests the same thing; we may be maintaining our population-employment levels, but that’s all. That certainly calls into question the assumption that we’ll reach a 4.0% GDP in Q2, as the Atlanta Fed’s economists expect, and that’s going to have some impact on whether we see action from the Fed on interest rates, too.

The bottom line: both overall economic growth and job creation remain stuck in the stagnation range. It’s not getting better, and arguably it’s sliding a little to the worse, although we’re not coming anywhere close to any indicators of a recession. The psychological impact of an election appears to be very limited, and it will take implementation of new policy for any real impact.

Addendum: Some are complaining this morning that the ADP numbers should have shown a larger BLS gain and wonder whether anyone’s cooking the books against Trump. The history of ADP’s month-on-month reports has not shown it to be a reliable indicator of official results ever, and ADP routinely overshot BLS during the Obama administration, too. I warned of that last night and advised considerable skepticism about their May results. This is not at all a new phenomenon. (ADP is better used as a long-term trend indicator.)