U.S. employers hired far fewer new workers in May than they did in April, but the U.S. jobless rate fell to its lowest mark since September 2001.

The U.S. Labor Department said today nonfarm payrolls grew by 78,000 in May, well beneath the 274,000 increase reported in April and the smallest gain since 2,000 jobs were added in August 2003.
The department also said job creation in March was revised downward, to 122,000 jobs from 146,000.

The U.S. unemployment rate, dropped a tenth of a percentage point to 5.1%.

Weakness was relatively widespread across industries. The service sector hired just 64,000 more workers after adding 232,000 jobs in April, while factories trimmed payrolls by 7,000 jobs, the eighth drop in nine months.

U.S. retailers added 11,000 jobs. Leisure and hospitality companies shed 6,000 jobs compared with a gain of 63,000 in April. Professional and business services trimmed payrolls by 1,000 in May compared to an increase of 33,000 in April. The construction industry added 20,000 jobs, less than half the prior month’s gain.

Separately, the Institute for Supply Management said that its non-manufacturing index moved down to a reading of 58.5, from April’s 61.7. The index, which measures activity in the U.S. service sector, was 63.1 in March. Any reading above 50 indicates growth in the sector.

The ISM’s employment index moved to 53.4, after hitting 53.3 in April and 57.1 in the month before that. The new-orders index for May was 59.7, versus 58.8 in April. The ISM also noted that service-sector price pressures grew at a reduced pace, with the prices index at a reading of 57.9, from 61.9 in April.