04
Jun
10

Job creation is still Photo ‘Bleak’

NEWS
Job creation is still Photo ‘Bleak’

Friday, June 4, 2010

U.S. job creation by private companies grew at the slowest pace of the year in May, even while the hiring of temporary census workers drove overall payrolls up 431,000.

The unemployment rate dipped to 9.7 percent as many people gave up searching for work.

The Labor Department’s new employment snapshot released on Friday suggested that outside of the burst of hiring of temporary census workers by the federal government many private employers are wary of bulking up their work forces.

That indicates the economic recovery may not bring relief fast enough for millions of Americans who are unemployed.

Virtually all the job creation in May came from the hiring of 411,000 census workers.

Such hiring peaked in May and will begin tailing off in June.

By contrast, hiring by private employers, the backbone of the economy, slowed sharply.

They added just 41,000 jobs, down from 218,000 in April and the fewest since January.

‘Although the economic outlook is improving, the recovery is still pretty tepid,’ said Paul Ashworth, senior U.S. economist at Capital Economics.

President Barack Obama acknowledged that temporary census jobs drove the overall payroll gain. But he said private sector hiring is growing.

He noted five straight months of job gains after devastating losses from the recession.

He said the recovery is still in its early stages, and that it will be uneven in the months ahead.

‘Things never go completely in a smooth line,’ Obama said during a speech on Friday.

‘This report is a sign that our economy is getting stronger by the day.’

However, Wall Street took the report as a disappointing setback.

Many investors had grown optimistic in recent days that the economy was gaining strength and that would be reflected in the May employment data.

They hoped a strong U.S. jobs report would put aside some concerns that Europe’s debt crisis could upset the U.S. recovery.

The weak private-hiring data sent a reminder that economic obstacles at home and abroad remain.

The Dow Jones industrial average tumbled about 180 points, or 1.8 percent, in mid-morning trading.

As stock prices sink, consumers may become more reluctant to spend more.

And if consumer spending falters, employers could become even more reluctant to ramp up hiring.

The unemployment rate, which is derived from a separate survey than the payroll figures, fell to 9.7 percent from 9.9 percent.

The dip partly reflected 322,000 people leaving the labour force for a variety of reasons.

All told, 15 million people were unemployed in May.

Counting people who have given up looking for work and part-timers who would rather be working full time, the ‘underemployment’ rate fell to 16.6 percent in May from 17.1 percent in April.

That reflected fewer people forced into part-time work.

Still, the high underemployment figure shows how difficult it is for jobseekers to find work.

The number of people out of work six months or longer reached 6.76 million in May, a new high.

They made up 46 percent of all unemployed people, also a record high.

Employers across a range of industries last month added jobs at a slower pace – or cut them.

Factories, professional and business services, leisure and hospitality companies, and education and health care firms all slowed hiring.

Financial services, construction companies and retailers all pared jobs.

Government, however, led the way in hiring, adding a whopping 390,000 positions last month.

Job gains in April were the same as first reported, while payrolls in March were slightly less – 208,000 versus 230,000.
» Related: President Obama on the May Jobs Numbers
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