Job growth faltered in May as employers boosted payrolls by just 75,000, according to Labor Department figures released today.
Wage growth also slowed in a development that should ease concerns about inflation getting out of hand.
The count of new jobs generated last month - 75,000 - was the smallest since October, when hiring practically stalled as companies were jolted by fallout from the Gulf Coast hurricanes. Job gains for March and April turned out to be weaker than previously reported.
On the other hand, the unemployment rate dropped a notch from 4.7 per cent in April to 4.6 per cent in May, the lowest since July 2001.
The payrolls figure and the unemployment rate come from two different economic surveys, which can sometimes provide a conflicting picture of what is happening in the labour market.
The seasonally adjusted overall civilian unemployment rate - 4.6 per cent in May - is based on a survey of 60,000 households. It showed that 288,000 people said they found employment last month, outpacing the number of people who couldn't find work.
Economists tend to put more stock in the much broader business survey of 400,000 work sites that is used to calculate the payroll figures.
In May, job cuts at factories, retailing and other fields tempered job gains in education and health care, financial activities and elsewhere.
The payrolls performance was much weaker than the 170,000 jobs that economists were forecasting would be added in May. They also were predicting the unemployment rate to hold steady at 4.7 per cent.
The report comes as President Bush is coping with low job-approval ratings. Trying to breath life into his economic agenda, Mr Bush earlier this week tapped Wall Street veteran Henry Paulson, chief of Goldman Sachs, to be the next Treasury secretary.