US employers created 138,000 new jobs last month, way below economists' expectations.
Figures published by the US Labor Department showed new job openings fell from 174,000 in April. Economists had expected a bump to 185,000.
Growth in average hourly earnings fell to 2.5 per cent, from 2.6 per cent the month before, while labour force participation fell to 62.7 per cent, from 62.9 the month before. However, there was some good news: unemployment fell to 4.3 per cent, a 16-year low.
The news caused the dollar to take a dive against the pound, falling from £0.7784 to £0.7758 shortly after the figures were published.
“The significant dip in nonfarm payrolls for May will be a concern for Donald Trump, particularly as the figure has slipped below the 150,000 generally considered as a marker of strong job creation," said Dennis de Jong, managing director at UFX.com.
“The embattled president has been under attack from all sides in recent weeks, but had at least been able to point to the strong performance of the US economy since his inauguration. However, a failure to deliver on jobs will leave him vulnerable, particularly as he made it the cornerstone of his successful run to the White House."
However, Kully Samra, UK managing director at Charles Schwab, said today's news was unlikely to derail expectations for a rate hike in June.
"One slightly disappointing month does not constitute a wholesale change in fortunes," he said.
"This is not so much a downward trend away from the strong jobs market but merely a temporary blip on the radar. Wider US economic data remains buoyant and equity markets resilient, even in the face of the potential turmoil coming out of Washington.
"Underlying numbers are still robust which should help solidify June rate hike expectations."