Employers added 431,000 nonfarm jobs nationwide in May, the biggest increase in a single month in a decade, the Labor Department said Friday. But the bulk of the growth was in government jobs, driven by hiring for the Census, and private-sector job growth was weak.
The unemployment rate fell to 9.7% nationwide, from 9.9% in April, the department said.
The figures for May represented the fifth consecutive month that payrolls have risen, but fell below analysts’ expectations that 540,000 jobs would be added to the economy.
The shortfall was immediately reflected in futures trading in the Wall Street stock indexes, with the Dow Jones industrial average expected to open almost 2% lower.
Altogether, 411,000 of the jobs added were for Census workers whose positions will disappear after the summer.
The net gain in government jobs was 390,000, while the private sector added only 41,000.
In April, nonfarm payroll employment grew by 290,000, but the unemployment rate rose nevertheless to 9.9% because of a surge in the labor force.
The economy has to add more than 100,000 jobs every month to absorb the new entrants to the market. And they are joining a labor pool that is already swollen with 15 million Americans looking for work.
More than eight million people have lost their jobs since the start of the recession in December 2007.
"You would need to be producing 150,000 to 200,000 jobs a month to be making a dent in this," said Doug Roberts, chief investment strategist for Channel Capital Research.
In addition, the quality of the jobs was important as well. "If you are getting people back to work but they are earning less, they are spending less," Mr. Roberts said. "It does not affect the underlying condition."
Economists are hoping that a recovery in the job market will lead to improved consumer spending, which accounts for 70% of the economy.
The Manufacturers Alliance/MAPI, a trade association, said this week that the sector was rebounding, based on low consumer inventories and strong gains in exports. Manufacturers are "bullish on job growth in a sector that is not known for job creation," said Daniel J. Meckstroth, the group’s chief economist.
"The supply-chain pipeline is filling with orders and manufacturing firms are reluctantly, but out of necessity, adding staff," he said.
But the Labor Department report on Friday showed that growth in manufacturing jobs was offset by losses in construction jobs. And there was a gain of 31,000 in temporary service jobs in May, meaning employers are not entirely convinced they want to commit to permanent hires.
Another area of weakness was in jobs for state and local governments, which are grappling with budget cuts. They shed 22,000 workers in May.
Investors have been watching the job figures for signs of health in the economic recovery. Corporate earnings for the first quarter have been generally stronger than expected, which raises hopes for more jobs.
But there are still uncertainties from the European debt crisis hanging over the financial sector, and how that will affect credit availability. A further strengthening of the dollar could lead to export stagnation and hit the bottom line of companies that rely on sales abroad.
The Labor Department figures show that the number of those unemployed for a long time continued to grow. Almost 6.8 million had been out of work for more than six months in May, and the average length of time that people remained out of work grew to 34.4 weeks, up from 33 weeks in April. When that figure reached 31.2 weeks in March, it represented the longest period since 1948, when the government started to keep track of such records.
The so-called underemployment rate, however, fell to 16.6% in May from 17.1% in April. The rate includes people whose hours have been cut in their jobs, and those who accepted part-time jobs because they could not full-time work. The rate was 16.9% in March.
That means 8.8 million people were working part time in May who preferred full-time work, compared with 9.15 million in April.
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