Jobless rate hits 9.4 percent, a 25-year high
A silver lining is the US economy shed fewer jobs in May than forecasters had predicted.
Momentum in the jobs market is finally starting to swing in a better direction.Skip to next paragraph
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For the past four months, the pace of job loss has slowed. Now, in another sign of better news for the US economy, the loss of jobs slowed in May to 345,000, lower than expected and half the average decline of each of the past six months, the government reported Friday.
But in a sign of how slowly companies are adding to payrolls, the unemployment rate rose from 8.9 percent in April to 9.4 percent last month, the highest rate in more than 25 years.
Despite the rising unemployment rate, economists viewed the report with cautious optimism. It shows the worst of the job losses are over, they say. The next step will be a bottoming out of job loss by fall. But, they warn, the US economy is not even close to becoming a dynamic creator of jobs.
Jobless rate expected to keep climbing
In fact, economists anticipate the unemployment rate is likely to continue to rise in part because, as job losses diminish, more people are encouraged to hit the streets looking for work.
“The irony is the better things are actually getting, the more people try to participate in the economy,” says economist Bob Brusca of Fact & Opinion Economics in New York. “And as they come in even faster than the economy is improving, it drives up the unemployment rate.”
In a forecast on Friday, economist Sung Won Sohn at California State University, Channel Islands, predicts the unemployment rate will top out at 10.5 percent by year's end, followed by a jobless recovery. “Employers want to make sure that a sustained economic recovery is here before hiring,” he says.
Despite the fewer job losses, total job losses for the economy are eye-opening. Since the recession began in December 2007, there has been a net loss of more than 6 million jobs. Some 14.5 million Americans are currently out of work. If laid-off workers who have given up looking for work or are involuntarily working part-time are included, the unemployment rate would have been 16.4 percent.
Manufacturing remains hard-hit
Job losses continued to be high in manufacturing, which shed 156,000 jobs in May after lopping off 154,000 jobs in April. However, job cuts in construction, the retail sector, and the financial sector slowed compared with the previous month. The education, healthcare, leisure, and hospitality sectors added jobs in May.