Membership Required
Invite New Members
From the Wall Street Journal | June 4, 2010
Employers added 431,000 nonfarm jobs nationwide in May, the biggest increase in a single month in a decade, the Labor Department said Friday. But the bulk of the growth was in government jobs, driven by hiring for the Census, and private-sector job growth was weak.
The unemployment rate fell to 9.7 percent nationwide, from 9.9 percent in April, the department said.
The figures for May represented the fifth consecutive month that payrolls have risen, but fell below analysts' expectations that 540,000 jobs would be added to the economy. Most of the private-sector gains were in manufacturing, but over all, the figures suggest that nongovernment hiring was weak.
Altogether, 411,000 of the jobs added were for Census workers whose positions will disappear after the summer.
President Obama tried to put a positive spin on the jobs report, telling workers at a trucking company in Hyattsville, Md., that the addition of 431,000 new jobs in May demonstrated that the economy was "getting stronger by the day."
Mr. Obama acknowledged that the temporary census workers accounted for many of the additional jobs, but he said that hiring in the private sector was also growing. He noted that there has been jobs growth for the last five months.
"These numbers do mean that we are moving in the right direction," Mr. Obama said. But, he added: "There are going to be some ups and downs."
In April, nonfarm payroll employment grew by 290,000, but the unemployment rate rose that month because of a surge in the labor force.
"The U.S. employment data was disappointing," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman, in a statement. Mr. Chandler noted that private-sector job creation, a crucial measure, reached only 41,000, compared with expectations for 180,000 and a three-month moving average of 155,600.
"The fact that the unemployment rate ticked down is not really good news," he added, "as the decline in unemployment was not a function of more jobs but a reflection of people leaving the work force."
The May figures suggest that the job market still has a long way to go. The economy has to add more than 100,000 jobs every month to absorb the new entrants to the market. And they are joining a labor pool that is already swollen with 15 million Americans looking for work.
More than eight million people have lost their jobs since the start of the recession in December 2007.
"These new data do not present a picture of a healthy private-sector growth, and nothing closely resembling the job growth needed to dig us out of our very deep hole," Lawrence Mishel, the president of the Economic Policy Institute, said in a statement.
In addition, the quality of the jobs was important as well.
"You would need to be producing 150,000 to 200,000 jobs a month to be making a dent in this," said Doug Roberts, chief investment strategist for Channel Capital Research.
"If you are getting people back to work but they are earning less, they are spending less," Mr. Roberts said. "It does not affect the underlying condition."
Economists are hoping that the recovery of the job market will lead to improved consumer spending, which accounts for 70 percent of the economy.
But there are issues of how sustainable the job growth is. The Labor Department report said that private-sector job growth was strongest in the temporary help and manufacturing sectors. There was a net gain of 31,000 temporary service jobs in May, meaning employers are not entirely convinced they want to commit to permanent hires. And the census positions are temporary.
Employment by all levels of government rose by 390,000 in May. Jobs with state and local governments, which are grappling with budget cuts and the prospect of job losses, decreased by 22,000 in May.
Analysts said that the figures for May showed how important government spending has been in supporting the domestic economy.
"Without the government, the total number of payrolls would have barely increased by enough to cover population growth," said Guy LeBas, the chief fixed-income strategist for Janney Montgomery Scott, in a research note.
The new job figures suggest that there are still headwinds to face, some of them from abroad, as the economic recovery progresses.
One area of potential growth is in the manufacturing sector. Manufacturers are slowly making gains in their businesses and that could lead to an uptick in future hiring.
The Manufacturers Alliance/MAPI, a trade association, said this week that the sector was rebounding, based on low consumer inventories and strong gains in exports. Manufacturers are “bullish on job growth in a sector that is not known for job creation,” said Daniel J. Meckstroth, the group’s chief economist. “The supply-chain pipeline is filling with orders and manufacturing firms are reluctantly, but out of necessity, adding staff,” he said.
Investors have been watching the job figures for signs of health in the economic recovery. Corporate earnings for the first quarter have been generally stronger than expected, which raises hopes for more jobs. But there are still uncertainties from the European debt crisis hanging over the financial sector, and how that will affect credit availability. A further strengthening of the dollar could lead to export stagnation and hit the bottom line of companies that rely on sales abroad.
President Obama called for an extension of unemployment benefits. The Secretary of Labor, Hilda L. Solis, called on Congress to also extend health coverage.
“We continue to push for programs to help unemployed workers make it through this difficult time,” Ms. Solis said in a statement. “I call on Congress to extend the unemployment insurance and COBRA subsidy provisions in the Recovery Act through the end of the year.”
The Labor Department figures show that the number of those unemployed for a long time continued to grow. Almost 6.8 million had been out of work for more than six months in May, and the average length of time that people remained out of work grew to 34.4 weeks, up from 33 weeks in April. When that figure reached 31.2 weeks in March, it represented the longest period since 1948, when the government started to keep track of such records.
The so-called underemployment rate, however, fell to 16.6 percent in May from 17.1 percent in April. The rate includes people with jobs whose hours have been cut, and those who accepted part-time jobs because they could not full-time work. The rate was 16.9 percent in March.
That means 8.8 million people were working part-time in May who preferred full-time work, compared with 9.15 million in April.
Anthony Watler of Rosedale, Queens, might find himself in that category. This week Mr. Watler, 58, put on a fresh shirt and suit and went to a Suffolk County job fair to look for work as an accountant, a job he lost when he was laid off in 2008, earning $80,000 a year.
After working in a temporary part-time job, Mr. Watler went on unemployment in January and uses the $425 a month in benefits while drawing down from his retirement account to make monthly mortgage payments of $2,000.
He has searched for work on the Internet and gone on job interviews.
“I always feel hopeful,” Mr. Watler said. “Until I get home and a couple of weeks pass and I don’t hear anything.”
On Wednesday he filled out an application and left his résumé at the job fair. He was told by one company that it did not need an accountant now, but he said he was willing to do whatever that business or any other had to offer.
“I would accept anything that is above unemployment,” he said.
Employers added 431,000 nonfarm jobs nationwide in May, the biggest increase in a single month in a decade, the Labor Department said Friday. But the bulk of the growth was in government jobs, driven by hiring for the Census, and private-sector job growth was weak.