“Disappointing” is the best term to use when looking at the recent jobs report for May. Industry insiders had hoped that this month’s report would bring relief to those who have been looking for jobs for a while but unfortunately, that’s not the case. Friday’s numbers show that unemployment fell to 9.7% from 9.9% in April but the number of new hires by private employers was much lower than expected.
431,000 jobs were created last month but the majority of them came from the hiring of Census workers through the government – all temporary jobs that will last only a few months. Prior to Friday’s released report, economists were expecting a ramp up of 513,000 jobs, which means the actual numbers were much lower than expected. 125,000 new jobs are needed each month alone to just keep up with population growth and prevent unemployment from increasing. Any hiring above and beyond that amount is a plus but with numbers trending below expectations, it will take awhile for hiring to get back on pace to levels found before the recession.
Interesting to note: The underemployment rate (the number of people who gave up looking for work or part-timers who would rather be working full-time) is still high at 16.6%, though that number has fallen from 17.1% in April. Also, 6.76 million people were out of work for 6 months or more in May, an all-new record high. That translates to 46% of all unemployed people. When you have almost ½ of your out-of-work labor force without a job for so long it’s no wonder that Congress is again considering extending unemployment benefits. Though facing opposition, the latest jobs report could push Congress to approve at least a partial extension. Recently, President Obama’s suggested extension through the end of year was rejected though the House approved a bill extending benefits through November. The Senate, however, has yet to approve the extension and this will be one of the top discussions senators will undertake when they come back to Capital Hill on June 7th. If the extension doesn’t get approved, 1.2 million unemployed workers will lose their benefits this month.
The repercussions of the recent report translate to the lower-than-expected results for big retailers as well. Major chains posted at 2.5% year-over-year increase in May sales, however that is lower than the expected 2.6%. Consumers are still tightly holding onto their dollars and loosening the purse strings is coming at a much slower rate than expected. Many economists look to retailer reports for a sign of the economy improving and so far, that sign is not there.
So are jobs coming back? Not yet, as seen by May’s unemployment report. Things are even tougher in Illinois where the unemployment rate was 11.2% in April. In addition, new job claims in Illinois increased last week with 16,011 new claims filed, 909 more claims than the week before. The current moving 4-week average for Illinois was 15,522, an increase from the 15,085 amount week ending May 22nd.