Let's just say it: The May U.S. jobs report released today (Friday) was abysmal.
American businesses in May added the smallest number of workers in a year, only 69,000 – less than half of the median analysts' estimate of 150,000.
The unemployment rate unexpectedly ticked up from 8.1% to 8.2% as job seekers returned to the workforce, the Labor Department report revealed.
In addition, revisions from previous months showed the economy gained fewer jobs in March and April than originally believed. March's employment numbers were reduced by 11,000 jobs to total 143,000, while April's plunged by 38,000 to total a lousy 77,000.
The disappointing numbers cast doubt on the strength of the U.S. economic recovery, and also overshadow any evidence that the labor market is improving.
The news sent the Dow Jones tumbling some 160 points on the open and more than 220 points by noon, with the other indexes following. While many traders were anxious to see May end, June hasn't started off in the right direction.
"Yuck, this is really not good," Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust, bluntly told Bloomberg News. "We're at a very precarious point right now as far as investors' psyche is concerned."
What Hurt the U.S. Jobs Report
Economists blame the dreary jobs report on slow growth in Europe and Asia, while also pointing a finger at Washington.
"The robust employment growth at the start of the year has clearly waned," Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc., told Bloomberg. "Hiring plans may have been put on hold amidst an increasingly uncertain outlook."
Some economists suppose the recent sluggishness reflects in part the extraordinarily warm winter which triggered spending in January and February that would have normally occurred in March and April, making data for the later months look artificially weak.
Thursday's less-than-stellar private, nonfarm payroll report from payroll processing firm ADP also fell short of expectations. Private, nonfarm payrolls added 133,000 jobs in May, according to ADP, coming in below consensus expectations of around 150,000.
Looking at the monthly change in employment over the past year, the downward trend signals a serious new slowdown.
New jobs currently being created are not nearly enough to replace the scores lost during the Great Recession and to provide opportunities for new graduates attempting to enter the work force.
What's worse: the numbers in the report are skewed. They fail to account for job seekers who have quit looking for employment, but may start again.
"During the recent recovery, the most effective jobs program has been to convince adults they don't want or need a job. Virtually, the entire reduction in the unemployment rate from 10 to 8.1 percent has been from adults quitting the labor force," Peter Morici, an economist and professor at the Smith School of Business at the University of Maryland, told Fox Business News.
"The percentage of adults participating in the labor force-those employed, self employed, or unemployed but looking for work-has declined significantly. If the adult participation rate was the same today as when Barack Obama became president, unemployment would be 11 percent," Morici penned.
It's All Politics…
What most of us want to see is not the politically whitewashed, carefully crafted, and technically worded statistics represented in the U.S. jobs report.
The number that most people are really curious about is one that includes those who have fallen off the radar. That percentage would include people who are underemployed; the discouraged bunch no longer looking; and those whose unemployment benefits have been exhausted.
What also should be compared is jobs numbers versus the percentage of people exiting the workforce. Workers are retiring later and staying on the job longer leaving fewer openings for job seekers.
Friday's numbers could have a major impact on the polls in November. Scores blame the Obama administration for not doing more in regards to jobs creation, and others cite Obamacare as holding the reins on hiring.
If job-growth numbers have anything to do with election results, recent data suggests President Obama could soon be unemployed.
Related Articles and News:
- Money Morning: April's U.S. Jobs Report a Far Cry from Where We Need to Be
- Fox Business News: What to Expect from Friday's jobs report
- USA Today: Friday's job report could have large election impact
- Bloomberg: U.S. Employers Add 69,000 Jobs, Fewer Than Forecast
- Bloomberg: Treasuries Surge as Stocks Fall After U.S. Jobs Report