EmailIt can now be confirmed that the labor market, which showed so much promise from November 2011 through March 2012, has reversed direction. Instead of embarking on hiring gains that are necessary to spur more output, businesses are again buttoning up and preparing for a sluggish economy. Nonfarm payrolls increased by 69,000 in May after increasing a downwardly revised 77,000 (from 115,000) in April. That was the smallest gain since adding only 54,000 in May 2011. The Briefing.com consensus expected payrolls to increase by 150,000. Private payrolls added 82,000 jobs in May, down slightly from a downwardly revised 87,000 (from 130,000) in April and the smallest increase since only 52,000 jobs were added in August 2011.
The consensus expected private payrolls to increase by 168,000. The average hourly workweek fell from 34.5 hours in April to 34.4 hours in May. Average hourly earnings increased by 0.1% in May. Altogether, the small gain in payrolls and the slight increase in hourly earnings were not enough to offset the decline in the average workweek. As a result, aggregate earnings fell 0.1% in May and are likely to result in depressed May consumption numbers. The unemployment rate increased from 8.1% in April to 8.2% in May. The consensus expected the unemployment rate to remain at 8.1%. The increase in unemployment, however, came from an a pickup in labor force participation. The labor force increased by 642,000 jobs in May and resulted in an increase in the participation rate from 63.6% in April to 63.8% in May.
