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Jobless rate 9.4% in May; layoffs slow
Question of the Day
The economic picture brightened a little last month as employers eliminated jobs at about half the record 700,000 rate of monthly job losses seen at the beginning of the year.
The Labor Department reported Friday morning that 345,000 jobs were axed in May, following a somewhat diminished 501,000 job loss in April. But the unemployment rate continued to soar from 8.9 percent to 9.4 percent — the highest in more than a quarter century.
“The labor market is in bad shape, but the pace of deterioration slowed,” confirming the improving trend expected on Wall Street, said Harm Bandholz, economist with Unicredit Markets. He was somewhat suspicious of the marked fall-off in the pace of layoffs seen in May, however, because it was inconsistent with recent increases in claims for jobless benefits reported by the states.
May’s job losses bring the total of jobs slashed during the recession to 6 million. The layoffs were widespread among most industries, and led by huge job losses in manufacturing, as seen in past months. Layoffs at Chrysler and General Motors factories as the companies fell into bankruptcy most likely accounted for much of 156,000 industrial jobs lost.
But the layoffs in construction, retailing and the broad services area — previously hard hit sectors — were about half the pace seen previously.
Employment in the two sectors that never stopped shedding jobs — education and health care — actually picked up to 44,000 in May from 13,000 in April. But the government, which had been a source of job growth in past months, cut 7,000 positions in May.
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For the millions of people still working, wage growth was extremely weak during the month, with hourly earnings essentially unchanged at $18.54, the department said. The workweek also declined 0.1 hour to 33 hours.
The combination means take home pay was down for the month — putting a dent in the pocketbooks of hard-pressed workers and making it harder for consumers to spend.
“The weak labor market will suppress consumption growth well into 2010,” Mr. Bandholz said.
John Silvia, chief economist at Wachovia Securities, said the high unemployment rate signals “more household credit stress” ahead for jobless workers. But the slackening of job losses in the last two months is “consistent with our expectations for growth in the second half of the year.”
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