May jobs report disappoints

Scott Brenner, of Haddonfield, found a job. J.M. VON BERGEN / Staff
Scott Brenner, of Haddonfield, found a job. J.M. VON BERGEN / Staff
Posted: June 03, 2012

Job growth stalled in May, as the nation's economy created 69,000 jobs, well below expectations, and less than the 100,000 new jobs needed monthly to keep up with population growth.

May's unemployment rate rose slightly, from 8.1 percent in April to 8.2 percent. One reason: Workers, perhaps encouraged by more positive reports in earlier months, re-entered the job market, but couldn't immediately find a position.

"Problems in the job market were long in the making and will not be solved overnight," Alan B. Krueger, chairman of the White House's Council of Economic Advisors, said of the monthly jobs report from the U.S. Labor Department.

"The economy lost jobs for 25 straight months beginning in February 2008," he said, before continuing on a more optimistic note. "Today, we learned that the economy has added private-sector jobs for 27 straight months."

Wall Street didn't like the news, with the Dow Jones Industrial Average losing almost 275 points to close Friday afternoon at 12,118.57.

The consensus among several economists was that May's report was just plain wacky.

"Today, it was really, really weird," said economist Joel Naroff, president and chief economist with Naroff Economic Advisers Inc. in Bucks County.

For example, there's the disparity between the results of the two surveys that make up the monthly report.

The survey of businesses showed the increase of 69,000 jobs in May. But the survey of households was much more optimistic, with an additional 422,000 people identifying themselves as employed during the month - a positive trend that has pretty much continued since a low point in December 2009.

Naroff said he couldn't explain the disparity, but he and others think that it's partly the result of this year's unusual weather outstripping the Labor Department's ability to adjust for it.

Typically, the Labor Department presents figures in two formats - one of them, "seasonally adjusted," attempts to even out the variations in seasonal employment, factoring out, for example, the rise in retail employment in December.

But now, that seasonal adjustment in combination with the unseasonably warm winter seems to be causing havoc in the statistics, goosing them up in January and February and pushing them down in March, April, and May.

In fact, the Labor Department revised those numbers down, from 154,000 jobs created in March to 143,000 and from 115,000 jobs created in April to 77,000.

Mark Zandi, chief economist with Moody's Analytics in West Chester, gave this example: "I had a guy fixing my walk in February," Zandi said. "Any other February, my walk would be under snow or ice."

This year, though, the person would be counted as employed in February, boosting that month's statistics, and indeed, February was a good month, adding 259,000 jobs.

But in April, that same man's job wouldn't have counted as a new job, hence the paltry statistic.

Beyond the weather, Zandi said, the situation in Europe is spooking employers.

"Business people are nervous," he said. "There's a fear factor. If anything anywhere goes off the rails a little bit, they lose confidence" and don't hire.

Friday's jobs report showed increased hiring in manufacturing, wholesale trade, retail, real estate, finance, health care, and nongovernment-related education. Construction and government hiring fell.

The number of unemployed people grew to 12.7 million as both the average and median length of unemployment trended up, after several months of decline. Nearly 43 percent of the unemployed have been out of work for more than six months, and the average length of unemployment is now nearly 40 weeks.

Cheryl Spaulding, cofounder of Joseph's People, a network of church-based support groups for the unemployed in the Philadelphia suburbs, said the laid-off people she has met were extremely discouraged.

"They have given up," she said. "They are blaming themselves."

Even so, there has been some hiring.

Scott Brenner, of Haddonfield, illustrates a trend. As 2011 wound to a close, Brenner, a web designer, realized that his freelance business wasn't producing enough reliable income to support himself and his college-age daughter.

So, in January, just as the jobs numbers were expanding, he went from self-employed to unemployed by entering the labor force and looking for work. It took him until May to find a job and get hired.

"I like the steady paycheck," he said, plus, the companionship and mental stimulation he receives from his coworkers beats working alone at home.

From his perspective, there has been some tech hiring, but he's not sure how that translates to the wider job market. "Unemployment is still awfully high," he said. "I think everyone is so cautious."


Contact Jane M. Von Bergen at 215-854-2769 or jvonbergen@phillynews.com, or follow on Twitter @JaneVonBergen. Read her Jobbing blog at www.philly.com/jobbing.

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