This morning’s weaker-than-expected national jobs report kept financial markets in a tailspin.
The new numbers came in a week filled with negative economic news that had already lowered Wall Street’s expectations – but, apparently, not enough.
Job growth stalled in May. A meager 54,000 jobs were added to nonfarm payrolls, compared with an average of 220,000 jobs added in each of the previous three months, according to the U.S. Bureau of Labor Statistics (BLS) report.
After payroll processor ADP reported weak job growth and the Institute for Supply Management charted slowing industrial production, Wall Street economists earlier this week lowered their projections for job growth, causing a two-day sell-off in the market. But today’s official BLS jobs report was below even those revised expectations.
“Clearly this is a weak number, weaker than expected,” said David Joy, chief market strategist for Minneapolis-based Ameriprise Financial.
Joy said that industrial production slowed down in the United States and globally last month.
“There appears to be a lot of noise in this number” as a result of global disruptions in manufacturing supply chains after the Japanese earthquake,” he said. “We could get a bounce back, once these supply chain problems are rectified.”
Terry Fitzgerald, senior economist at the Minneapolis Federal Reserve Bank, described the job numbers as “disappointingly modest” but added that “one number doesn’t fundamentally change the outlook” for moderate economic growth.
While acknowledging the disruption from Japan, he was skeptical that it had much impact. “Frankly, it seems unlikely this is holding back a roaring recovery,” he said. “At the margin, it’s holding things down.”
“Minnesota, “by and large, tracks the national economy,” he added. “To the extent the national economy is not coming back strongly, eventually we’re going to see that in Minnesota.”
The state has consistently had an unemployment rate well below the national average, but Fitzgerald said he doubted that would continue. “As the national economy goes, so goes Minnesota.”
Minnesota is scheduled to release its May unemployment report on June 16.
According to a BLS survey of employers, private-sector companies hired only 83,000 workers in May — the fewest in nearly a year — as local governments continues to cut jobs — 28,000 last month, the most since November.
Since the recent employment low in February 2010, the private sector has added 2.1 million jobs while the public sector has shed 300,000 jobs, resulting in a total of 1.8 million new jobs.
Nationwide in May, the service sector continued to add jobs as professional and business services grew by 44,000 and health care added17,000 jobs. Health care employment has grown an average of 24,000 a month for the past year.
But the unemployment rate, based on a separate household survey, inched up 0.1 of a point to a seasonally adjusted 9.1 percent in May. The number of long-term unemployed (those jobless for 27 weeks and over) increased by 361,000 to 6.2 million and make up 45.1 percent of the total unemployed.
The number of involuntary part-time workers remained unchanged, according to the BLS, at 8.5 million,
There also were 822,000 discouraged workers, those who are not currently looking for work because they believe no jobs are available for them. The May number represents a decrease of 261,000 from a year earlier.