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While a surge in corporate profits reflect an improving economy, several government reports show that the United States continues to be plagued by a lingering "jobless recovery."
Most analysts, including President Barack Obama, are predicting a strong May jobs report due out today (Friday) with more than 500,000 new jobs added to the U.S. economy.
"We expect to see strong jobs growth in Friday's report." Obama predicted in a speech in Pittsburg on Wednesday.
Still, the numbers are likely to be inflated due to temporary hiring by the U.S. government for the 2010 Census, and overall unemployment isn't expected to ease significantly.
Most economists expect the unemployment rate to stubbornly hover around 10%, reflecting the disparity between an overall economy that shows signs of solid growth and a job market that continues to struggle.
According to a national employment report published Thursday by payroll giant Automatic Data Processing Inc. (Nasdaq: ADP) and consultants Macroeconomic Advisers, private-sector jobs in the U.S. increased by 55,000 last month. Economists had expected ADP to report a job gain of 75,000 in May.
Separately, the number of U.S. workers filing new claims for unemployment benefits fell last week by more than expected, but not by enough to signal the job market is on the path to recovery.
The government said in its weekly report Thursday that initial claims for jobless benefits fell by 10,000 to 453,000 in the week ended May 29. Economists who were surveyed by Dow Jones Newswires had predicted claims would decrease by 5,000.
Despite this latest drop, the four-week moving average – which aims to smooth volatility in the data – rose by 1,750 to 459,000. Total claims lasting more than one week also rose.
"Claims would suggest the underlying state of the job market remains somewhat fragile," John Herrmann, senior fixed-income strategist at State Street Global Markets LLC in Boston told Bloomberg News. "There is a disconnect given the improvement we are seeing in economic growth."
The disconnect may have several sources, Richard Berner, co-head of global economics at Morgan Stanley & Co. in New York, wrote in a May 28 note.
One reason is the extension of benefits – up to 99 weeks in some states – raises the incentive to file. While half the claims are typically rejected, the jump in claims in March and April may reflect more ineligible filers.
An increase in filings by construction workers and by temporary government employees who are helping with the census may also be boosting claims, Berner wrote.
Another report released by the Labor Department earlier this week showed hundreds of metropolitan areas faced tougher job prospects in the month of April compared with one year ago. The unemployment rate was higher in 291 of the 372 metropolitan areas covered by the report.
Companies continued to cut costs at the start of the year even as the economic recovery gained momentum, meaning they got more from existing work forces.
Even though worker productivity figures for the first quarter were revised downwards yesterday, new Labor Department figures showed that efficiency climbed 6.1% over the past four quarters, the biggest 12-month gain in nine years.
At the same time, unit labor costs – a key gauge of where prices are heading – declined at a 1.3% pace, showing employers squeezed more from remaining staff to control expenses.
The productivity gains should help keep prices in check, allowing the Federal Reserve to keep short-term interest rates at or near zero to support the economy and give unemployment time to come down.
As the uneven economic recovery works its way through different segments of the business landscape, some companies are adding workers while others are shedding them.
Lowe's Cos. Inc. (NYSE: LOW), the second-largest U.S. home improvement retailer, said it is adding more than 1,400 positions for employees to visit customers' homes to sell them windows, doors and other products, and will fill those jobs internally and by taking on new employees.
Meanwhile, Palo Alto, California-based Hewlett-Packard Co. (NYSE: HPQ), the world's largest personal- computer maker, plans to eliminate about 9,000 jobs and retool its computer-services business. The Hershey Co. (NYSE: HSY), the 116-year-old chocolate maker based in Hershey, Pennsylvania, may cut 500 to 600 jobs from a historic plant that produces chocolate Kisses.
News & Related Story Links:
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Jobless Recovery Category - Wall Street Journal:
Data Indicate Slow Jobs Recovery - Bloomberg:
Jobless Claims in U.S. Decreased by 10,000 to 453,000 - Fort Liberty:
Obama Leaks May Jobs Report Data
Congress wasn’t worried about the deficit when that big insurance company and Wall Street execs were giving themselves bonuses with taxpayer money!!! Next election – let Congress feel the sting of the unemployment lines!!! – How many years have you paid taxes? 30? 40? Your government bails out bankers and Wallstreet execs using your tax dollars – but unemployment is allowed to expire? What happened to "by the people" or "for the people"? Or are the big campaign contributors the only "people" who count to congress? They are playing games AGAIN FOR THE THIRD TIME while you are wondering how to feed your kids? Figure it out! Malfeasance – Failure of a public official to perform their duties!!! Next Election MAKE YOURSELF MATTER BY VOTING!!! 10% unemployment carries 10% of the vote! Use it!! Fire them all next election or recall every Congress member NOW for Malfeasance – Failure of a public official to perform their duties!!! Next Election – Lets get people elected who actually represent tall the People- this current congress represents only special interest groups!
Its not the handpuppet that needs to be replaced its the hand.
Why is outsourcing never mentioned in articles about the unemployment rate? Millions of jobs have been outsourced to India and elsewhere over the last decade. The loss was largely hidden by temporary increases during the housing bubble. Of course the Great Recession lowered employment in virtually all areas. But those "exported" jobs are gone, and more are likely to follow.
Have you not read and understood the book entitled "The World is Flat?" Businesses exist to make money/profits and thus are driven to seek the lowest cost in the conduct of their business. The labor market is now a world-wide one. Government attempts to punish corporations for outsourcing will likely lead to those corporations simply exiting the USA and setting up in a foreign country whose laws appear to corporate executives to be more friendly to their businesses.
The author of the article ought to learn that the city in Pennsylvania is Pittsburgh, not Pittsburg.
Dave R. I see your point.
Our country has funded and fought many wars to expand democracy thoughout the world.
Every time we succeed we give all the powerful corporation born here in America another country to run to when they don't like their bottom line. Not very patriotic of them is it? I think it would be very patriotic for people in America to boycot their products and services.
What were we thinking every time we wanted to win a foriegn war?
Just about every single economic recovery since 2000 has been a so-called "jobless recovery", especially the first two years of positive quarterly growth in GDP. So, all recoveries these days are "jobless". Anything new here?
I have to take exception to “Jobless Recovery” as a legitimate term. It's an overused oxymoron.
Without an improvement in employment, it's a jobless economy. Any implication of "recovery" is fleeting if not totally false.
"…an overall economy that shows signs of solid growth and a job market that continues to struggle." So show me the solid growth? Ah, it doesn't really exist in a lousy job market.
"…uneven economic recovery" is a euphemism for non-existent recovery. If one could identify an "even recovery" then maybe a recovery could be reallly and truly happening. Until then, I doubt everything that mentions a Jobless Recovery.
This is a terribly flawwed article.
[…] more production outsourced to the rapidly growing economies with lower labor costs. That's caused unemployment rates to soar. The good news for those economies is that the inflation in emerging markets will soon help them […]