The Disappointing May Jobs Report

Today’s unemployment was surprisingly weak. The jobless rate for May was 9.698%. That’s below the peak rate of 10.147% from last October but we’re slightly above where we were in January and February.
Here are some eye-opening stats: Over the last 10 years, the labor market has increased by 12 million yet the number of employed has risen by 2.8 million and the number of unemployed has grown by 9.2 million. It’s as if the unemployment is running at 77% for the number of new people added to the workforce. Not to mention the labor force participation rate has fallen from rough two-thirds to less than one-half.
Nonfarm payrolls rose by 431,000 but that was almost entirely due to government hiring of census workers.

“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.

Posted by on June 4th, 2010 at 10:12 am


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