Posturing for Progress

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The Latest S e c on da r y M a r k e t a na ly t ic s se r v ic i ng or ig i nat ion ANALYTICS Jobs Added, Unemployment Grows Despite the increase in jobs, unemployment climbed for the first time since January. T he economy added 175,000 jobs in May, and the unemployment rate ticked up to 7.6.percent, the first month-over-month increase since January, the Bureau of Labor Statistics (BLS) reported. Economists had forecast payrolls would grow by 170,000 and that the unemployment rate would remain at 7.5 percent. Payroll growth for April, originally reported at 165,000, was revised down to 149,000; for 50 | The M Report March, it was revised to 142,000 from 138,000. Average weekly hours remained at 34.5, while average hourly earnings rose by one cent. The increase in the unemployment rate came from an increase in the labor force as more people looked for work. As a result, the number of persons meeting the government definition of unemployed (out-of-work, availablefor-work, and looking-for-work) went up. Unemployment, by that definition, increased by 101,000 to 11.76 million, the highest level since February. But the number of re-entrants to the labor force—individuals who had been unemployed but not looking for work—increased 182,000. The employment-population ratio, which measures the percentage of the over-16 population employed, remained at 58.6, far below its peak of 64.7 percent in April 2000. When the recession began in December 2007, the employment-population was 62.7 percent. The payroll report reflected the impact of the federal budget sequestration. Government jobs fell a net 3,000 in May for the third month in a row and the seventh time in the last eight months. Within that category, there were 14,000 fewer federal jobs, dropping the number of federal jobs to 2,748,000—the lowest level since February 2008. State payrolls contracted by 2,000 but local governments added 13,000 jobs. The report for May also showed some expected slippage in payroll jobs by industry sector. Manufacturing jobs, for example, dipped 8,000, the third straight monthly decline. While sequester cuts affect manufacturing, particularly in defense spending, the dip in manufacturing payrolls tracked recent reports on personal spending. According to the most recent reports from the Bureau of Economic Analysis, personal consumption spending on "goods" fell in April for the second straight month. Spending on "services" edged up in April after dropping in March. The employment report, though, hinted at improving retail sales as the number of retail jobs increased 27,700, but the originally reported gain of 29,000 retail jobs for April was revised down to 19,900. Retail sales could be constrained by continuing weak income growth. While average weekly earnings rose in May, the yearover-year increase in aggregate earnings—factoring in the number of payroll jobs—was 3.9 percent in May. The figure is far below the 4.8 percent average annual growth the year before the recession began. By industry sector, 40.4 percent of the new jobs came in the retail and leisure and hospitality sectors—the two lowest paying sectors. Professional and business services added 57,000 jobs, including 25,600 temporary jobs, indicating a continuing reluctance by employers to commit to permanent staff additions. The education and health services sector—a steady source of growth—added

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