REUTERS / Brian Snyder

The official US employment report out Friday showed that hiring slowed sharply last month and that wage growth cooled.

The report could add to concerns that the US's economic expansion is running out of steam.

It could also bolster expectations for the Federal Reserve to lower interest rates.

In the latest snapshot of the American economy, the official US employment report out Friday showed that hiring slowed sharply in May and that wage growth cooled.

The Bureau of Labor Statistics said the US economy added 75,000 nonfarm payrolls in May, compared with economist expectations for an increase of 180,000 jobs. The unemployment rate held steady at 3.6%.

Average hourly earnings rose by 0.2% in May, the same as in the previous month. That brought wage growth from a year earlier to 3.1%, missing economist expectations.

The labor market was slow to pull Americans from the sidelines in May. The labor-force participation rate remained at 62.8%, which is low by historical standards and compared with other countries.

The latest employment report could add to concerns that the US's economic expansion is running out of steam. Escalating trade tensions have put businesses and investors on edge in recent weeks, with growth in the US and elsewhere already expected to slow over the next year.

"Not good," Austan Goolsbee, the chairman of the Council of Economic Advisers in the Obama White House, said of the May jobs report. "Let's hope it is a blip and not an indication of a substantial slowdown. But the other indicators are also pointing to substantial GDP growth problems and so it's moving into yellow light territory."

President Donald Trump increased tariffs on China last month and threatened to expand them to a broader range of products. He has separately vowed to slap duties on all imports from Mexico, the US's largest trading partner.

"In our estimation the trade wars the United States finds itself ensnared in are going to cause hiring to slow as business sentiment eases, productivity-enhancing capital expenditures fall off, and the damage eventually spills over into the consumer sector," said Joseph Brusuelas, the chief economist at RSM.

On average, the US has added 151,000 jobs each month since March.

Friday's results are likely to bolster expectations for lower borrowing costs. Federal Reserve Chairman Jerome Powell signaled last week he was open to cutting interest rates if trade conditions worsened.

"This is the type of read the doves will really take to, as it supports the argument for cutting rates beyond politics or trade issues, which were never part of the Fed's mandate to begin with," said Mike Loewengart, the vice president of investment strategy at E-Trade.

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