Friday, June 04, 2010
Job Growth Disappoints on Weak Private Sector Hiring
June 4, 2010
WASHINGTON (Reuters) - Private employers hired fewer workers than expected in May, a setback for the labor market recovery, even as temporary census hiring pushed overall payrolls growth to its fastest pace in 10 years.
The Labor Department said on Friday payrolls rose 431,000 as the government hired 411,000 workers to conduct the population count. [note: temporary jobs] That was the largest monthly increase since March 2000 and marked a fifth straight month of gains.
But private employment, a barometer of labor market strength, increased just 41,000 after rising 218,000 in April, as employers opted to increase hours rather than hire new workers. The average workweek rose to 34.2 hours from 34.1 hours in April.
Major U.S. stocks indexes fell sharply in the opening minutes of trading, while Treasury debt prices rallied. The U.S. dollar added to gains against the battered euro.
"The key disappointment was in the private payrolls. While we did get the census hiring, the private economy is not hiring the way we would have liked," said T.J. Marta, founder and market strategist with Marta on the Markets in Scotch Plains, New Jersey.
Payrolls data for March and April was revised to show 22,000 fewer jobs created than previously reported. May's hefty employment gain lowered the unemployment rate to 9.7 percent from 9.9 percent in April.
Analysts polled by Reuters had expected non-farm payrolls to rise 513,000 and private businesses to create 190,000 jobs. The jobless rate had been seen dipping to 9.8 percent.
The economy has now grown for three straight quarters and the recovery from the worst recession since the Great Depression of the 1930s is broadening.
The jobless rate is a drag on President Barack Obama's popularity and could cost the Democratic Party dearly in November's congressional elections, with voters in an anti-incumbent and anti-Washington mood.
"This shows the recovery continues but at a modest pace. Expectations going forward are going to be tempered," said Boris Schlossberg, director of research at GFT Forex in New York.
Unemployment will probably remain high through the year as the millions of people who lost their jobs during the recession seek work and those who had dropped out of the labor force resume their search. Workers are counted as unemployed only if they are actively looking for work.
Outside the census, hiring slowed significantly from the prior months. The dominant services sector saw payrolls increase 37,000 after surging 156,000 in April.
The goods producing sector created only 4,000 new jobs following 62,000 jobs in April. This was as construction employment fell 35,000 after gaining 14,000 in April.
Recruitment for the population count saw government employment rising 390,000, overshadowing the drag from jobs cuts in cash-strapped states and localities.
Job growth is critical to sustain a rebound in consumer spending, especially now that recovery in Europe is under threat from government spending cuts to bring down huge budget deficits.
The debt crisis, stemming from Greece's fiscal problems, has hammered global stock markets, but analysts so far see a limited impact on the U.S. economy.
Posted by Lady Patriot at 9:21 AM