For the first time in almost a year, the unemployment rate rose to 8.2% in May as the economic recovery appeared to not only slow but almost completely stall. And it gets worse.
By almost all measures, the latest unemployment news this morning is troubling. Economists were estimating anywhere from 75,000 to 195,000 new jobs in May. Instead, 69,000 new jobs were added. The April numbers, initially reported at 115,000, were revised by the Bureau of Labor Statistics to a mere 77,000.
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On average, about 73,000 new jobs were created over the last two months, far from the kinds of numbers most economists say are needed for the U.S. to get back to where it was before the recession, which would be more like 200,000 to 250,000 jobs per month – for the next seven years. The Department of Labor’s revisions subtracted a total of 49,000 jobs from payrolls in March and April.
There were a few very limited bright spots in the morning numbers. The labor force participation number rose by 0.2 percentage points to 63.8% after a decline of the same rate the month before. The sectors that saw job growth in May included health care, transportation and manufacturing, but construction employment declined. Service providers added 84,000 jobs, but in most other sectors, the unemployment rate was flat.
Another bleak statistic from May’s jobs report is the so-called underemployment rate, which increased from 14.5% to 14.8%. Those numbers include part-time workers who are looking for full-time work as well as those who have given up looking for a job.
The number of long-term unemployed Americans also rose. According to the Department of Labor, the proportion of unemployed who have been out of work for 27 weeks or more is now at 42.8%.
Markets in the U.S. and around the world were down Friday, partly because of the poor unemployment figures in the U.S. but also because of new numbers from the Eurozone, which shows unemployment there at 11%.
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It appears that the optimism seen from employers in the first part of the year has quickly waned, as businesses sense that problems in Europe regarding Greece and the future of the Eurozone are far from over.
A number of economists this morning haven’t even tried to paint rosy pictures of the unemployment report, with most of them blaming the increased uncertainty in Europe as a reason why employers aren’t hiring.
While the Department of Labor characterized many of May’s numbers as virtually “unchanged,” it won’t appear that way to most Americans. It’s clear that the recovery is sputtering after another spring that seemed promising. And much like last year, job growth just isn’t strong enough to usher in a true recovery.
The numbers are also likely to make President Obama’s re-election bid that much harder. While the unemployment rate may be essentially unchanged from last month, it looks as if the economy is moving backward once again.