The Bureau of Labor Statistics surprised economists when it reported that job losses in May slowed dramatically over the previous months. The 345,000 job loss was the lowest since September and about half the rate of the previous six months.
Stocks rallied on the news immediately after the market opened, but turned negative in part the Associated Press reported, on a rumor that the government’s job loss number was wrong. The Labor Department said the numbers are correct.
Despite the encouraging job loss numbers, the BLS report showed the unemployment rate rose to 9.4 percent, a little higher than had been expected. The rate, up half a point over April, grew the number of people out of work by 787,000. Officially, 14.5 million people were unemployed in May. Of that number, 21 percent have been out of work for 15 or more weeks. These long-term unemployed, as the government calls them, have now reached 4.5 percent of the entire U.S. workforce, a percentage not seen in the 51 years the data has been collected.
“There is pretty good evidence that the recession is bottoming,” Doug Roberts, chief investment strategist of ChannelCapitalResearch.com, told the AP. “The real question is the type of recovery. Just because we’re reaching a bottom doesn’t mean a bounce is imminent.”
Several indices have shown signs of improvement. The Conference Board reported consumer confidence rose in May as did the number of jobs advertised online. The Monster Index, though dropping two points, has halted its rapid decline since May 2008 when it stood at 166. Last month it was at 118.
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Economists have been predicting a slow recovery and the BLS report certainly offers support for that view. The average workweek fell to 33.1 hours, a record low, evidence that employers are still cutting hours. At the same time, those working part-time because they have no other choice, and those considered marginally attached to the workforce also grew in May. When added to those out of work, the unemployed and underemployed rate hit 16.4 percent, about 40 percent higher than a year ago.
The biggest losses were in manufacturing, where 156,000 jobs were lost. Most of that came in automotive related sectors. The BLS reported, “Three durable goods industries — motor vehicles and parts (-30,000), machinery (-26,000), and fabricated metal products (-19,000) — accounted for about half of the overall decline in factory employment. Since its most recent peak in February 2000, employment in motor vehicles and parts has fallen by about 50 percent.”
Construction was also off, though the 59,000 jobs lost was half the 117,000 average of the last six months.
There were also significant losses in finance, professional and business services, and in retail. Only health care showed real gains, adding 24,000 jobs in May.