Staffing & Employment News

Lower Private Payroll Numbers than Expected, partially due to Re-entry of Discouraged Workers in April?

The jobs market gained momentum over the last few months; in the prior three months the number of jobs added averaged 220,000. The May figures released today however came in lower than expected. While private-sector employment added 83,000 jobs, this was a disappointing reversal of previous months’ growth. Expanding Industries include professional and business services (+44,000), health care (+17,400) and mining.

When an economy is healthy, monthly payrolls gains of around 150,000 are considered healthy; in order to recover from a downturn economists expect increased upwards of 250,000 monthly.

The Bureau of Labor Statistics release questions whether the May numbers are a temporary soft spot or a new trend. Severe domestic weather is not apparently a factor according to the Labor Department, but high energy prices and Japan’s continuing challenges probably are.

“There are good reasons to suppose the third quarter will be better because we have seen some easing in commodity prices, gasoline prices are starting to come down and the bad effects on vehicle production of the Japanese problems will start to unwind,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, reported Reuters.

The good news is that initial jobless claims have eased from elevated levels. And while the unemployment rate rose to 9.1 percent last month from 9.0 percent in April, this is probably due in part to the re-entry of discouraged workers who were motivated by the April hiring momentum, and re-entered the job market.

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