Looking For A Job? Jobs Slowdown Adds to Global Fears

Restored from the Empower Network archive (2011–2017), lightly edited to meet our current advertising standards. Views are the original author’s.

Jobs Slowdown Adds to Global Fears

Are you looking for a job?

Payrolls Rise by Just 69,000; Jobless Rate Ticks Up to 8.2%

Feeble hiring by U.S. employers in May added gloom to an already darkening picture of the economy, which appears to be joining Europe and Asia in a spreading slowdown.

Employers added a seasonally adjusted 69,000 jobs last month, the smallest increase in a year, while numbers for the two prior months were clipped by a combined 49,000. The politically salient jobless rate ticked up—to 8.2% from 8.1% in April—and the report quickly became a flash point for a presidential election focused on the job-creating bona fides of the candidates.

Jobs were only one of the disappointing numbers out Friday that fueled anxiety about the U.S. economy. A separate report showed manufacturing growth cooled in May, with troublingly sharp drops in both production and exports. Another report showed consumer spending rose in April, but by more than incomes, suggesting the risk of consumers struggling to keep spending.

To be sure, the U.S. shows resilience in some areas. Inflation remains tame and auto sales continue to boom, while falling energy prices are helping ease some of the stress for consumers. But the larger picture is of a U.S. economy that seemed to be gaining traction earlier in the year only to start wobbling as the weather got warmer—a familiar pattern in recent years.

Investing And Inflation

Stock markets tumbled in the wake of the job report. The Dow Jones Industrial Average slid more than 200 points, giving up its gains for the year, and the Standard & Poor’s 500 entered correction territory.

Jittery investors fled to bonds, with the 10-year Treasury’s yield falling below 1.5% for the first time ever.

The dismal jobs report is sure to sharpen a debate at the Federal Reserve about whether to do more to spur economic growth. Some Fed officials who are less worried about inflation had already started lobbying for additional action before Friday’s numbers.

But the central bank’s most influential decision makers have been hesitant to signal any additional moves. The report will give volume to the advocates of action and put pressure on officials to act, though it’s not clear this will result in a broader consensus for action right away.

Some Fed officials might want to wait to see more data before making what would surely be a controversial decision to do more to spur growth.

“The economy is shifting from ‘muddling through’ to paralysis,” -Pierpont Securities economist Stephen Stanley

The jobs report came a day after the government downgraded its estimate of economic growth in the first quarter to a 1.9% annual rate, down from 3% in the fourth quarter of 2011. Some analysts said they planned to lower expectations for growth in the current quarter.

The U.S. recovery appears to be tracking a similar pattern of the three-year-old recovery, in which the economy gains steam early in the year only to slow down in the spring and summer. Previous slowdowns, however, have been more clearly linked to isolated events—such as a gas-price spike or a disaster such as last year’s Japanese earthquake and tsunami.

Economists attribute the slower growth to several factors. A warm winter likely led companies to hire earlier than usual, boosting winter job growth but taking away from spring job growth.

Renewed concerns about Europe—including the prospect of a Greece exit from the euro and subsequent contagion in financial markets—is shaking consumer and business confidence. Uncertainty about domestic policy—including what happens with a variety of tax rates that are set to rise at the end of the year—could be causing businesses to hold off on hiring.

Friday’s labor-market report was disappointing nearly all around. Job growth over the past three months is less than half the average 250,000-plus jobs added in the three earlier months—and nearly every sector has been hit. Workers saw their weekly hours cut, a sign of weaker demand from customers. The ranks of the long-term unemployed rose.

The jobs report contained one small glimmer of hope: the work force grew, a possible sign that more people felt more confident about their job prospects and began searching for work again.

Author: JOSH MITCHELL
Source: The Wall Street Journal