A dismal job market report Friday gave a resounding confirmation to fears that the United States recovery has markedly slowed, reflecting mounting evidence of a global slowdown.
The report, which showed the smallest net job growth in a year and an unemployment rate moving in the wrong direction, was a political game-changer that bodes ill for President Obama as he faces re-election.
It provided traction for his Republican rival, Mitt Romney, at a time when politicians have been deeply divided over the most effective way to strengthen the economy. And it put increased pressure on the Federal Reserve to take further action to stimulate growth.
The United States economy gained a net 69,000 jobs in May, according to the Labor Department. The unemployment rate rose to 8.2 percent from 8.1 in April, largely because more people began looking for work. And there was more unexpected bad news: job gains that had been reported in March and April were revised downward.
Economists can explain away a month or two of disappointing numbers. But this was the third consecutive disappointing monthly performance by the job market, following a winter of solid gains, convincing many that the economic recovery has, for the third year in a row, lost momentum. A few analysts even reintroduced a possibility that dogged last year’s forecasts but did not come to pass: a double-dip recession.
The report on American jobs added to the global pall that has deepened as a result of renewed uncertainty in Europe and slowing growth in China and India. Global financial markets, already weak in early trading on Friday, sank further on the numbers. On Wall Street, the Dow Jones industrial average lost 1.8 percent, or 221 points, by early afternoon, and the main index of the German stock market closed down 3.4 percent.
Yields on United States and German government bonds also slumped further as traders sought safer investments. The 10-year Treasury yield fell to another record, 1.46 percent, and the German tw0-year bond fell below zero.
Once again, uncertainty became a dominant theme. “Manufacturers are very concerned about Europe because a blowup in Europe means a global slowdown,” said Ellen Zentner, the senior United States economist for Nomura, the financial services firm. “It hasn’t translated into layoffs — businesses are just hiring less.”
Republicans immediately seized upon the jobs numbers as an opportunity to criticize Mr. Obama’s economic policies.
“The American people don’t have to accept President Obama’s new normal of fewer jobs and higher prices,” House Speaker John A. Boehner said in a statement.
The May jobs report showed gains in health care, transportation and warehousing, and wholesale trade, while construction jobs fell by a seasonally adjusted 28,000. Even some bright spots, like booming auto sales, failed to bolster manufacturing employment by much — it was up by 12,000 jobs. Once again, government at all levels shed workers.
“In February or March, I thought the labor market had achieved escape velocity,” said Patrick J. O’Keefe, the director of economic research at J. H. Cohn, a consulting firm. “It appears to me now that that was a premature call.”
Several members of the Federal Reserve’s policy-making committee have said in recent days that they were not inclined to change current policy, but that position has always been contingent on continued growth. The economy needs to grow by about 125,000 jobs each month just to maintain the current unemployment rate.
When the Fed committee next meets, in late June, it will face the possibility that the economic recovery once again has failed to take off.
Global fears showed up in other economic data on Friday. Slowing exports cooled a the major manufacturing index, though it remained in positive territory with a strong report of new orders. That news came on the heels of falling consumer confidence, an uptick in new claims for unemployment benefits, and a downward revision of the country’s overall economic growth in the first quarter, to a 1.9 percent annual rate from 2.2 percent.
The jobs report is based on two surveys, one of businesses and the other of households. The household survey showed a net gain of 400,000 in the number of people employed.
But David Rosenberg, the chief economist with Gluskin Sheff, an investment firm, said virtually all of the gain was in part-time work, while the number of full-time workers fell.
“Even the good news in this report was bad,” he said.
Some analysts said it was still too soon to declare a significant slowdown. The recovery’s roller-coaster trajectory may be largely illusory, Ms. Zentner said, the product of seasonal adjustment distortions and, this year, the unusually warm winter. While many economists say the weather impact, which caused some growth to occur earlier in the year than it otherwise would have, should be over by now, Ms. Zentner said her research showed that historically, May is the month that is most dampened after a warm winter. Seasonal adjustments were also making the winter look better than it was and the spring look worse.
“What the seasonal bias has done is it’s made the recovery look like a stop-start recovery,” Ms. Zentner said. “Instead, the pace of the recovery has been very steady — very moderate, and disappointing, but steady.”
The number of long-term unemployed, those who have been looking for more than half a year, rose by 300,000, even as hundreds of thousands of jobless workers lost their unemployment checks because of cutbacks. The long-term unemployed have the hardest time finding jobs, and many of them say they have not seen any improvement in the job market.
“Nobody has lists and lists of hundreds of available jobs,” said Glen Barry of Carmel, N.Y., who worked for the government at the county level for 25 years as a computer operator and was laid off in December 2010. “A lot of people work a job and a half now. Instead of having four people doing the work, they have two people doing the work.”
source: nytimes.com
