Unemployment Rate Drops...a Little
Even though the unemployment rate has edged back down from 9.9 to 9.7 percent, it's still a little early for anyone to take credit for a recovery. The most recent numbers released by the Bureau of Labor Statics reveal that employment did rise by 431,000 in May, but 411,000 of those jobs involved Census workers. The private sector added a mere 41,000 jobs last month, and analysts were disappointed. They'd expected an addition of 540,000 new jobs, in both the government and private sectors.
Stocks fell sharply as a result of the announcement, the Dow dropping 323.84 points--more than 3 percent, and closing back below the 10,000 mark. Seventy percent of the US economy is based on consumer spending, and when jobs are uncertain, no one feels like buying much.
President Obama told workers at a trucking company in Hyattsville, Md. that these numbers indicate the economy is getting "stronger by the day," but he also admitted "There are going to be some ups and downs."
Things are actually looking up for the manufacturing industry, however. It gained 29,000 jobs in May. Manufacturing has added 126,000 jobs so far in 2010, which is significantly better than it was doing this time last year. Mining employment also increased by 10,000 in May, with the industry adding 50,000 jobs since October.
But in the construction industry, jobs actually decreased by 35,000 in May, largely offsetting two months of gains. The number of jobs in state government (excluding education) also decreased, by 13,000. And employment in the formerly booming health care industry changed little, (up 8,000 jobs) indicating that that industry might have reached capacity for now.
One bright spot in the newly released May numbers shows that among the employed, the number of people working part time who preferred full-time work fell from 9.2 to 8.8 million. This could indicate that businesses are gaining confidence, and rehiring the full-time workers whose hours they reduced to part time over the past two years.
But the US employment situation has a long way to go before it fully accommodates the 15 million Americans looking for work. We need to add more than 100,000 jobs per month just to absorb graduates and other newcomers to the job market. An additional 150,000 to 200,000 jobs need to be added each month to take care of the 8 million people who have lost their jobs since the recession started in December 2007.