Jobs numbers for May squelch some economic optimism
Private sector businesses added just 41,000 new jobs in May, leading Republicans to criticize Obama's economic plan. But analysts see a few bright spots.
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Although the jobs report was not as good as expected, economists cautioned that it represents only one month.Skip to next paragraph
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“The trends still look pretty good,” says Bob Brusca, an economist with his own consulting firm, Fact & Opinion Economics in New York. “Often we get a weak month sandwiched in between good months, so the numbers can be somewhat irregular.”
Within the report were some improvements. For example, the average hourly work week for all employees on private nonfarm payrolls rose by 0.1 percent to 34.2 hours. While that may seem small, every 0.1 increase in hours worked is equal to 300,000 jobs, Zandi says. “It’s a good leading indicator of future job growth,” he adds.
In addition, hourly earnings rose 0.3 percent, their best showing in five months. The longer work week combined with higher wages increased payrolls by 0.7 percent, calculates Nigel Gault, chief economist at IHS Global Insight in a commentary. “Combine that with consumer prices, which probably fell in May, and that means a big increase in purchasing power for those with jobs,” he wrote.
Next month, when the June employment numbers are announced, most of the temporary Census jobs will be gone. “It would not be surprising to see 250,000 layoffs by the Census Bureau,” says Sung Won Sohn, an economist at the Smith School of Business, California State University, Channel Islands.
If the June layoffs are that high, he says, it would not be surprising for the June employment numbers to be negative.
Mr. Sohn, however, does not think a backsliding in employment will send the US economy into a second recession. “The European economic situation would have to get much worse for that happen,” he says. “But a negative jobs number by itself will not send us into a double dip recession.”
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