Total non-farm payrolls, a statistic researched and reported by the U.S. Bureau of Labor Statistics declined 49,000 in May while revisions to March and April subtracted 15,000.
The report marks the fifth consecutive month of negative job growth in an economy that is trying to stave off headwinds from rising food and fuel costs.
Even more worrisome to investors is the sharp climb in the nation’s unemployment rate. The report showed a 0.5% jump to 5.5% in May, its highest level since Oct. of fiscal ’04 and the sharpest one-month gain since 1986.
In May, employment in construction fell by 34,000, manufacturing fell by 26,000, retail trade decreased by 27,000, and temporary help services down by 30,000. Health care was the strongest sector. It added 42,000 jobs.
Average hourly earnings rose by 5 cents, or 0.3 percent, over the month to $17.94, seasonally adjusted. Thus far in 2008, payroll employment has declined by 324,000.
The big jump in the unemployment rate surprised economists who were forecasting a tick-up to 5.1 percent. Payroll losses, however, weren’t as deep as the 60,000 that analysts were bracing for. Still, job losses in both March and April turned out to be larger than the government previously reported.
There is no question that employers last month sharply cut jobs from different sectors. However, the 5.5 percent (a psychologically unsettling figure for investors) unemployment rate is relatively moderate judged by historical standards. It is lower than the average of the last three decades and more importantly, it is due to a combination of a large number of people re-entering the labor force and being counted as unemployed, and to a 1-month irregular swing in the data.
As we have mentioned repeatedly, the labor market will face complexity as the economy works through the housing correction, nevertheless, productivity growth will keep the economy growing.