Employment Growth Brakes Sharply in May

Employment Growth By Lucia Mutikani

Employment rose far less than expected in May to record its weakest reading since September, while the jobless rate rose to 9.1 percent as high energy prices and the effects of Japan's earthquake bogged down the economy.

Nonfarm payrolls increased 54,000 last month, the Labor Department said on Friday, with private employment rising 83,000, the least amount since June. Government payrolls dropped 29,000.

Economists polled by Reuters had expected payrolls to rise 150,000 and private hiring to increase 175,000 in May. The government revised employment figures for March and April to show 39,000 fewer jobs created than previously estimated.

The job creation slowdown confirmed the economic weakness already flagged by other data from consumer spending to manufacturing. It could stoke fears about the depth and duration of a slowdown that started early in the year.

The Labor Department said severe weather last month, including tornadoes and flooding, in the Midwest and the South did not materially affect data collection.

It also said that while some workers in those regions may have been temporarily displaced from their jobs, it found "no clear impact of the disasters on the national employment and unemployment data for May."

Economists still believe the lull in activity will be temporary. They cite high gasoline prices, bad weather and disruptions to motor vehicle production because of a shortage of parts from Japan as factors weighing on growth.

"It is clear we have temporarily entered a soft patch," said Christopher Probyn, chief economist at State Street Global Advisors in Boston, before the report.

"Nobody knows how soft and how long, but the best case view is that the fundamentals of the recovery remain intact and the economy will re-accelerate in the second half of the year."

The report provides one of the best early reads on the health of the U.S. economy and it regularly sets the tone for global financial markets. Worries about the pace of the U.S. economic recovery weighed on stocks on Thursday.

While the recent string of weak data has sparked talk about the need for the Federal Reserve to extend its asset purchasing program when it expires this month, analysts believe policymakers will take a soft payrolls report in stride.

Officials at the U.S. central bank regard the current downshift in the economy as temporary.

The Fed has been mapping out a strategy on how to start removing some of the massive stimulus it has lent the economy, and officials have made clear the bar for a further easing in monetary policy is high.

Temporary Factors at Play

"We should keep in mind that we have seen a lot of factors weighing on the U.S. economy in April and May, and should take this report with a pinch of salt," said Harm Bandolz, chief U.S. economist at UniCredit Research in New York.

"We may see some positive surprises in the second half of the year once the impact fades."

High gasoline prices hurt consumer spending in the first quarter, restricting economic growth to a 1.8 percent annual pace after expanding at a 3.1 percent rate in the October-December period.

The economy has regained only a fraction of the more than 8 million jobs lost during the recession. Economists say payrolls growth above 300,000 a month is needed to make significant progress in shrinking the pool of 13.9 million unemployed Americans.

The unemployment rate rose to 9.1 percent last month from 9.0 percent in April as some discouraged workers who had been inspired by the pick-up in hiring in April re-entered the labor market.

"There is so much slack in the labor market it's going to take a long time to get the unemployment rate down to between 6 and 7 percent. That's going to take years," said Stephen Bronars, a senior economist at Welch Consulting in Washington.

That could be bad news for President Barack Obama, whose chances of re-election next year could hinge on the health of the economy, particularly the labor market.

The employment report showed weakness across the board, with the private services sector adding 80,000 jobs last month after increasing payrolls by 213,000 in April.

Within the private services sector, leisure and hospitality fell, showing no boost from McDonald's recruitment of about 50,000 new staff in April, which was after the survey period for that month's payrolls. Spring is traditionally a strong hiring period for McDonald's.

Retail employment, which recorded its largest increase in 10 years in April, fell 8,500 last month. Manufacturing payrolls growth contracted 5,000 last month, while construction employment rose 2,000.

The report showed the average work week steady at 34.4 hours and few signs of wage inflation, with average hourly earnings rising 6 cents.

(Reporting by Lucia Mutikani, Editing by Andrea Ricci)

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One more lesson about why not very many community organizers make it to prominent positions of leadership.

June 04 2011 at 4:56 PM Report abuse +1 rate up rate down Reply

I am a union sheetmetal worker and if the Obama administration gave big money to unions I haven't seen it. I have been laid off now for more than 1 year with future not looking very promising here in the mid west. Gasoline went up .32 between Thursday night and Friday morning to 4.12 a gallon. With my unemployment I went to the grocery store spent 72.00 and got 3 bags of food spent another 15.00 to get their and back thats 87.00 out of 390.00. The living off the government thing is not working for me to well at the moment. And because our unemployment comes on a debit card you are allowed a certain number of trnsactions then they star charging a fee to use ,so it doesn't go very far. It is rediculous to think that in the 5000 years or so that man really has not learned how to rule himself or even keep an economy on track it is unbelievable. So all you righties and lefties go at it and blame each others favorite guy but it is we the human race that cannot do it and never have been able to. WHY?

June 04 2011 at 11:41 AM Report abuse +1 rate up rate down Reply
1 reply to ronmarkm6's comment

I surmise you joined the union because you had to in order to work. Doesn't sound like they offer much support once you are unemployeed and the dues dry up. Move, find a job in a right to work state like Texas, skilled labor is a nice asset unless you come with a union card tied around your neck . Good luck, hope it works out for you unemployment when you have marketable skills is tough.

June 04 2011 at 5:01 PM Report abuse rate up rate down Reply

I have always believed that statistics lie and liars use statistics. That is what politicians do best.

June 04 2011 at 10:59 AM Report abuse rate up rate down Reply

Not hard to understand the Government has stab the American worker in the back. Less worker's more taxes. Snow ball heading for hell !!!

June 04 2011 at 9:45 AM Report abuse rate up rate down Reply

The economy is worse than reported, since the world economy hinges on the current US economic position. True statistics will never be reported. Wall Street and other world markets would plunge upon learning the true economic position in America.
I agree with the comments by ronmarkm6. Big lenders lie, and steal our homes. The loan modification process is a joke. The government is aware of the loan modification scam but does nothing to regulate big lenders such as Fannie Mae, Freddie Mac, and Wells Fargo etc. Lenders pretend to be working with home owners, knowing from the beginning that foreclosure is the ONLY option they are going to pursue. The homeowner is jerked around for months, lead to believe the lender is “working” with us. Big banks rule the economy and make up their own rules as they go along. The bail out money is used to line the lenders own pockets not to assist the homeowner.
The middle class is shrinks each time a home goes into foreclosure, taxpayer pay the heavy price. The American dream has been pulled out from under us. Big banks steal our greatest asset… our home. Many Americans have lost everything and will never be able to regain our losses.

June 04 2011 at 9:39 AM Report abuse rate up rate down Reply
Welcome Vic!

This is getting silly. There are two hiring seasons. In the spring the garden shops, landscapers , construction, suppliers and manufactorers and other outside work gets a boost. A few months before Christmas your retail and wholesale outlets and stores, warehouses, shipping companies and related businesses get a boost. The problem is everytime seasonal hiring starts the The White House says unemployment is going down and everytime it levels off or goes back up everybody looks surprised. It will probably get worse before it gets better again because most of those jobs are temporary and it'll probably show gteat figures again around October. For ten or fifteen percent of the population our jobs aren't coming back. If you worked in constrution or related work chances are some guy from ElSalvador or Guatamala or Mexico has your job and isn't giving it back. If you were in manufactureing or tech service work, your job is in China or India or anywhere but the United States and it's not coming back and there's about to be an explosion of white collar professionals because the 30 million illegals are breading like rabbits and their kids, legal and illegal, are taking full advantage of minority grants and cheap in state tuition and in a few more years white collar America is going to have the same problem

June 04 2011 at 9:26 AM Report abuse +2 rate up rate down Reply

It would be nice if someone could explain the moral and monetary distinctions between Mr. Bush's Wall Street pals and those of Mr. Obama. So far, we have seen big unions and big financial institutions prosper under the Obama Administration while the middle class is worse off than it was under the Bush Administration. It takes some convoluted fiscal and ethical self delusion to think that we have seen an improvement.

June 04 2011 at 9:20 AM Report abuse +1 rate up rate down Reply

Folks can complain about Bush and the GOP all day long. What they need to do is examine the fruits of the crop they planted when they elected Mr. Obama. His policies don't work. The numbers prove it. Another pretty speech or un-kept promise is all he has to offer.

June 04 2011 at 9:16 AM Report abuse rate up rate down Reply

Where are the jobs Obama promised in his election campaigns? I have been unemployed for a while now, looking for a FULL-time job. All I see is everyone only hiring PART-time, 10 to 20 hours a week. I am not in my young twenties or even thirties any more. I don't want to or can be able to work 3 or 4 PART-time jobs anymore. Most employers don't hire someone in their fifties. Why should they, they won't be a slave to the company for thirty plus years. And the emploers don't have to pay anything higher than minimum wage or offer any kind of benifets, sick leave or vacation days, or offer any health care, (plus they don't have to pay in for unemployment insurance for PART-timers) to PART-time emploees. The employers win. They can have 4 PART-timers instead of one FULL-timer. I don't see any statistics on under employed workers, or even people who have to work 3 or 4 PART-time jobs to equal one FULL-time job.

June 04 2011 at 9:04 AM Report abuse +1 rate up rate down Reply

GOP's jobs ideas: Keep Bush tax cuts, freeze regulations ...
Jul 16, 2010 ... Employers won't create jobs until they have a clear sense of ... said House Republican leader John Boehner, after meeting with 16 ... It's also not knowing whether the 2001 and 2003 Bush tax cuts will be allowed to expire on Dec. ... small businesses who have been burned by Wall Street, Big Banks ...


June 04 2011 at 8:46 AM Report abuse rate up rate down Reply
1 reply to Kevin's comment

We have seen Mr. Obama's ideas and they don't work. Try some current events. Bear in mind that for the first two years of the Obama administration that the Democrats controlled both Houses of Congress and the White House. If that is insufficient power and authority to achieve something, they are worthless as a party.

June 04 2011 at 9:18 AM Report abuse +1 rate up rate down Reply

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