US job growth falls sharply in May, jobless rate rises to 9.1%

WASHINGTON (ICIS)--US job growth fell sharply in May, the Department of Labor (DOL) said on Friday, with employers adding only 54,000 workers in the month, far short of the expected 170,000 new hires and nudged the unemployment rate up to 9.1%.

The US jobless rate had been 9% in April, an increase from the 8.8% unemployment figure in March.

In its monthly workforce report, the department noted that May’s mediocre 54,000 jobs increase was in stark contrast to gains that had averaged around 220,000 new hires in the three prior months.

The US needs to add about 150,000 new jobs each month simply to accommodate first-time workers entering the workforce.  Economists say that the nation’s economy needs to generate 250,000 jobs monthly if it is to meet new worker demand and bring back some of the 8m jobs that were lost in the great recession.

The disappointing news about declining job growth in May came amid multiple other negative news reports about the US economy, adding fuel to fears of another dip into recession.

The department said that private sector employers added 83,000 workers last month, but that figure too was much lower than the average of 244,000 new business hires seen in the previous three months.

In addition, that modest private sector workforce improvement was in part offset by some 28,000 job losses in local government.  Most US state governments are facing major budget deficits and have been laying off workers to help reduce costs.

More worrisome for the overall US economy, the department said that the nation’s manufacturing industries shed 5,000 workers in May.  That was seen by economists as another sign that the country’s manufacturers are again pulling back, concerned that the US economic recovery could falter.

The downturn in manufacturing jobs parallels recent data showing that new orders for machinery have declined, an indication that producers are reluctant to make new investments for fear product demand will not develop.

The National Federation of Independent Business (NFIB), which represents small firms that typically do most of the hiring, said that its own data indicate that “meaningful job creation on Main Street has collapsed”.

Economists put part of the blame for May’s poor employment numbers on increasing fuel costs and bad weather, including tornadoes and floods that plagued large portions of the country last month.