US employers add fewest workers in year as jobless rate rises
(Bloomberg) — The US labour market stumbled in May as employers added the fewest workers in a year and the unemployment rate rose, dealing a blow to President Barack Obamas re-election bid and raising the odds the Federal Reserve will take steps to boost growth.
Payrolls climbed by 69,000 last month, less than the most- pessimistic forecast in a Bloomberg News survey, after a revised 77,000 gain in April that was smaller than initially estimated, Labor Department figures showed yesterday in Washington. The median projection called for a 150,000 May advance. The jobless rate rose to 8.2 percent from 8.1 percent.
This is a total disappointment all the way around, said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. Once again the job market and the economy looked stronger at the start of the year and come March, April, May, it certainly got a lot of drag on its forward momentum.
The Dow Jones Industrial Average wiped out its 2012 advance, the yield on the benchmark 10-year Treasury note fell below 1.50 percent for the first time and commodity prices slumped. The labour data reinforced concern that the global economy is heading for a third midyear setback. Other reports showed manufacturing shrank in Europe and slowed in China.
Estimates of the 87 economists surveyed on May payrolls ranged from increases of 75,000 to 195,000 after a previously reported 115,000 rise in April. Revisions subtracted a total of 49,000 jobs to payrolls in March and April.
The unemployment rate was forecast to hold at 8.1 percent, according to the survey median. The jobless rate has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
Any time that unemployment goes up, thats not a good thing for our business or probably any other retailer because people have less money to spend, said Robert Niblock, chairman and chief executive officer of Lowes Cos., the second-largest US home improvement retailer.
From a macroeconomics and jobs standpoint, we are trying to be sufficiently cautious in our outlook, Niblock told reporters yesterday after the companys annual shareholders meeting in Charlotte, North Carolina.
The number of people unemployed for 27 weeks or more rose as a percentage of all jobless, to 42.8 percent from 41.3 percent. Among them is Dexter Favors, 57, an Air Force veteran who lives in Atlanta.
I have been searching relentlessly and I cant find anything, said Favors, who has been out of work for three years, though his wife is employed. It is kind of rough right now because she is pulling the load.
Favors, who worked last as a grocery store department manager, said he has put out around 80 applications for work and continues to search.
Mitt Romney, the presumptive Republican nominee in the November presidential election, seized on the jobs figures to attack Obama.
It is now clear to everyone that President Obamas policies have failed to achieve their goals and that the Obama economy is crushing Americas middle class, Romney said in a statement yesterday.
The administration, seeking to blunt the political impact, highlighted private payroll gains over the past 27 months while promoting measures Obama has proposed to boost hiring.
Weve known all along that this is a fragile world economy, but we have been adding jobs, Alan Krueger, chairman of the White House Council of Economic Advisers, said on Bloomberg Televisions In the Loop with Betty Liu yesterday. Wed like to see more job growth given the enormous hole that we face in terms of jobs in this country.
The employment report increases the odds that Fed policymakers led by Chairman Ben S. Bernanke will take further action to stimulate the worlds largest economy when they next meet on June 19-20. The Feds program to extend the maturity of bonds on its balance sheet, known as Operation Twist, is set to expire at the end of the month.
My feeling is that because the slowdown in the economy has been fairly rapid compared to what they expected that theyll go ahead and extend Operation Twist, said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina.
The participation rate, which indicates the share of working-age people in the labour force, rose to 63.8 percent from 63.6 percent, the Labor Department report showed.
Factory employment increased by 12,000, less than the survey forecast of a 15,000 increase, yesterdays Labor Department report showed.
Employment at service providers increased 84,000 in May. Construction companies cut 28,000 jobs, the most in two years, and retailers boosted payrolls by 2,300. Government payrolls declined by 13,000.
Americans average hourly earnings were 1.7 percent higher than a year earlier, the smallest 12-month gain since December 2010. At the same time, they worked 34.4 hours a week on average, six minutes less than the month before.
The so-called underemployment rate — which includes part- time workers whod prefer a full-time position and people who want work but have given up looking — increased to 14.8 percent from 14.5 percent.
Some bright spots in Fridays data came by way of monthly reports on US factories and consumer spending. The Institute for Supply Managements index of manufacturing eased to 53.5 in May, in line with the median estimate in a Bloomberg survey, from Aprils 54.8. Readings greater than 50 signal expansion. Orders climbed to the highest level since April 2011.
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