U.S. Jobless Rate Falls to 5.8% in May
The nation’s unemployment rate dipped to 5.8% in May and employers added 41,000 jobs, the Labor Department said Friday, but almost no one took the report as evidence the economy is recovering quickly.
Government analysts accompanied the monthly figures with a sweeping revision of past reports that indicates the department missed about one in every five jobs lost since the March 2001 start of the recession. In addition, more than half of the new hiring in May was by temporary employment agencies--hardly a vote of confidence that the country is coming back with all cylinders firing.
“The bottom line is that we’re in the early stages of a tepid recovery,” said Los Angeles economic consultant Donald H. Straszheim.
The new statistics do suggest that the worst of the layoffs may be over. The combination of May’s net gain of 41,000 jobs with April’s revised gain of 6,000 and March’s revised loss of 5,000 paints a picture of a labor market that is bottoming out after sliding almost two years.
Traditionally disadvantaged groups were among the biggest winners. Latino unemployment dropped almost a point to 7% in May as 86,000 workers of Hispanic origin found work. The African American jobless rate dropped a full point to 10.2% as 123,000 black workers landed positions.
Still, the new numbers offered working people scant cause for celebration. May’s jobless rate was two-tenths of a point lower than April’s 6% level, but almost 2 percentage points higher than the three-decade low of 3.9% achieved in October 2000. About 8.4 million people were out of work last month, 2.8 million more than when the job market began unraveling. One in every five had been jobless for six months or more, double the number of a year earlier.
For those still working, the news was not much better. Average hourly earnings increased only 3 cents to $14.70. Over the year, earnings have risen only 3.2%, well short of the 4%-plus jumps during the last few years of the expansion.
The new jobs report gives no hint about whether the country will be able to dodge the experience of the last recession, when unemployment continued rising almost 2 1/2 years after the March 1991 end of the downturn and took nearly five years to regain the lows of the previous expansion.
“The good news in the new employment numbers is we’ve stopped going down,” said Paul A. McCulley, managing director of Newport Beach-based Pacific Investment Management Co., which manages about $260 billion in bonds. “But the bad news is we haven’t started going back up again,” and it could be some time before that happens, he said.
Despite the mixed implications for working people, analysts said the May employment report contained good news for investors, showing jobs growing fast enough to dampen concerns about a “double-dip” recession, but not quickly enough to spur demands for higher wages.
And the report was not the only good news recently. Separately Friday, the Commerce Department said inventories of U.S. wholesalers dropped unexpectedly during April as sales grew at their fastest pace in three years, a sure sign of recovery. Earlier in the week, industry groups reported that business activity in both the manufacturing and service sectors had risen at their fastest pace in more than two years.
But these latest signs were shrugged off by Wall Street, which remains in a deep funk over accounting scandals, corporate busts and worries that growth at any pace won’t be enough to justify the still-high prices of many stocks.
The major stock indexes closed down Friday for the third week in a row. The Dow Jones industrial average lost 34.97 points, or 0.4%, to close at 9,589.67, its lowest level since Nov. 12. For the week, the Dow lost 3.4% of its value. Other major indexes lost even more.
Job growth during May was concentrated in services while hard-hit manufacturing continued to lose positions, although at a slower pace.
Temp agency hiring during the month raised to 126,000 the number of workers that industry has added since February.
The new jobs only partially offset the huge losses the industry sustained in the preceding 18 months, when it shed more than 800,000 workers.
Factories trimmed 19,000 in May, but that was a far cry from the 115,000 they slashed monthly between the March 2001 start of the recession and January of this year.
