May’s Job Numbers Take a Step Backby Tim Manni
Despite the fact that jobs were added at their fastest pace in a decade, stocks were driven lower this morning and optimism of a firm and continued recovery faded due to the fact that the number of new jobs in May were overwhelmingly exaggerated by the hiring of temporary census workers.
Payrolls increased by 431,000 in May, yet according to the U.S. Labor Department, private-sector payrolls increased by only 41,000 (290,000 jobs were added in April). The unemployment rate did drop from 9.9% in April to 9.7% in May, a result of fewer job seekers in the market, according to Economy.com.
While the overall number of unemployed workers ticked downward last month, the average duration of unemployment set a new record.
The number of unemployed workers edged down in May, to 14.97 million as more workers left the labor market. The number of reentrants fell by 286,000 in May. The number of workers unemployed longer than six months edged higher to 6.76 million. A record 46% of unemployed workers have been out of work more than six months. Meanwhile, the number of newly unemployed workers (less than five weeks) increased to 2.75 million or 18.7% of all unemployed workers. The average duration of unemployment increased to 34.4 weeks, a record.
The title to last month’s job’s post (regarding April’s numbers) was “‘Labor Market Has Best Month in Three Years.’” While we have cautioned before about concerning yourself too much with the month-to-month changes — advising instead to focus on the overall trends — we can’t help but wonder if May was just a fluke, or if it negatively impact our job numbers moving forward?
A post from a Wall Street Journal blog offers some insight:
The U.S. economy in May added the most jobs in a decade — 431,000 — largely because of census hiring. But the boom appears to be over, and that could translate into ugly overall employment numbers in the coming months if private employment doesn’t pick up.
Improvement in the overall U.S. economy over the past year could provide a better foundation for private employment growth compared to the period after the two prior censuses. If it doesn’t, expect the monthly payroll report to show negative numbers — net losses across the overall economy — into the summer.
How does all this jobs talk influence/impact housing and mortgages? Find out by reading our post “This is How Jobs Impact Housing.”