- The Washington Times - Friday, June 3, 2005

For job seekers, bosses and investors alike, the monthly ups and downs of the nation’s employment figures are like riding a jerky roller coaster.

The latest report, released by the Labor Department yesterday, showed that job growth slowed nearly to a crawl in May. But the unemployment rate dipped to a low 5.1 percent.

The recent pattern of choppy job creation continued. Employers boosted payrolls by just 78,000 after a hiring spurt of 274,000 in April. May’s job gain was the weakest in almost two years.

Economists offered a variety of reasons for May’s moderation: the effect of high energy prices squeezing bottom lines, companies reducing production to work off excess goods on shelves and back lots, cool weather and a statistical payback after the strong job figures in April.

Job cuts last month were reported in categories including manufacturing, leisure and hospitality, accounting and bookkeeping and temporary help. Those losses tempered gains in retail, construction, education, health care and elsewhere.

For now, some economists don’t see the slower job growth of May as a sign that the economy is sliding back into a soft patch. Others aren’t so sure.

The lackluster job growth performance, however, does raise the odds that the Federal Reserve may slow — or soon end — its yearlong campaign to tighten credit, many economists agreed.

Despite the slow growth in payrolls, the civilian unemployment rate declined fractionally last month — to 5.1 percent. That was down a notch from April’s 5.2 percent jobless rate and was the lowest overall since September 2001.

“You have both a bit of sweet and a bit of sour in the report,” said Mark Zandi, chief economist at Economy.com.

The employment report often offers seemingly conflicting pictures of what is happening in the labor market because figures are based on two separate statistical surveys. And there clearly was a mismatch between the two surveys in yesterday’s report.

The unemployment rate is calculated on the basis of a survey of 60,000 households, sort of a poll of the jobs market. That survey indicated that 376,000 people said they found employment last month, outpacing the number of people who couldn’t find work.

But economists tend to give more credence to a much broader survey of business payrolls that examines 400,000 work sites. And that’s the one that showed only 78,000 jobs added to payrolls.

President Bush wants to see the economy and the job market in good shape, especially as he tries to sell to the public and Congress his vision for revamping Social Security that includes letting workers set up individual investment accounts.

The mixed signals sent by yesterday’s report offered something for both Republicans and Democrats.

Treasury Secretary John W. Snow welcomed the drop in the jobless rate and also pointed out that payrolls have grown by 3.5 million in the past two years. “The economy keeps moving in the right direction,” he said.

But House Minority Leader Nancy Pelosi, California Democrat, argued that “job growth is disappointing and wages are stagnant. … Republicans remain in denial.”

Workers’ average hourly earnings rose to $16.03 in May. While that’s 2.6 percent higher than the same month last year, wage growth is not keeping up with the pace of inflation, economists said.

In an encouraging sign for job seekers, the average time the unemployed spent searching for work in May was 18.8 weeks, an improvement from the average of 19.6 weeks the previous month.

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