The BLS recently announced that U.S. employment in May rose by just 54,000 workers on a month-over-prior month seasonally adjusted basis. This is a sharp departure from the average monthly gains of 200,000+ for the previous three months. Clearly, the lackluster Q1 real GDP growth of 1.8% was too weak to stimulate increased job gains in the second quarter.
On a positive note, May was the 15th consecutive month of job gains in the private sector, with an addition of 83,000 in May. At the same time, the public sector shed 29,000 jobs as state and local governments scramble to address either budget cuts or inadequate revenue gains. This is the seventh consecutive month of declines for government employment.
Most of the gains (+51,000) came from the service producing sectors, while the goods producing sectors added only 3,000 jobs. Construction and housing woes continue to be a serious drag on the national economy.
Simplistically speaking, about 100,000 jobs need to be added each month to keep up with increases in the population. The unemployment rate will increase when fewer jobs are added.
About 200,000 jobs are required to bring the unemployment rate down significantly. At that rate (200,000 jobs added each month), it will take about three years to return to the peak employment of 2008.
In 30 days we will know if this dismal report was a sign that the economy has slowed or if it is a blip in the road to recovery. In about two weeks, the Office of Labor Market Information will provide their update for the state. Stay tuned.
©Copyright 2011 by CBER.