2012-06-01 20:17:02

Job Growth Continues Decline

U.S. job growth braked sharply for a third straight month in May and the unemployment rate rose for the first time in nearly a year, raising chances of further monetary stimulus from the Federal Reserve to support the sputtering recovery.

Employers added a paltry 69,000 jobs to their payrolls last month, the least since May of last year, and 49,000 fewer jobs were created in the previous two months than had been thought, the Labor Department said on Friday.

The report is troubling for President Barack Obama, whose prospects of winning re-election in November could hinge on the economy's health. Republican opponent Mitt Romney called the report "a harsh indictment" of Obama's policies.

The jobless rate rose to 8.2 percent in May from 8.1 percent in April, although the increase reflected more people entering the labor force to look for work, a possible sign of growing confidence.

The data offered the clearest evidence yet that the deepening debt crisis in Europe and a slowdown in China were starting to dampen an already lackluster U.S. recovery. Concerns over the course of U.S. fiscal policy may also be weighing.

"The U.S. is not an island. What happens abroad matters here," said Diane Swonk, chief economist at Mesirow Financial in Chicago. "It is difficult for anyone to commit to hire when growth remains subdued, and our fiscal problems both at home and abroad appear to be compounding."

Data from other major economies was also worrisome. Chinese factory output barely rose in May and manufacturing activity in Britain shrank at its fastest pace in three years. Earlier reports had shown factory activity also declined in Germany and France.

U.S. stocks, already on the ropes due to a steady diet of troubling news out of Europe, lost more than 2 percent in the afternoon session. The Dow Jones industrial average sank into negative territory for the year.

Investors rushed into the safety of U.S. government bonds, pushing the yield on the benchmark 10-year Treasury note to a record low below 1.5 percent. The dollar fell against the euro.

The broadly weak payrolls report raised the odds of the Fed launching a third round of bond purchases or expanding on other efforts to help the flagging recovery. But many economists said it was unlikely the U.S. central bank would pull the trigger at its next policy meeting on June 19 and 20.

Economists had expected payrolls to add 150,000 jobs and the unemployment rate to hold steady at 8.1 percent.

"There's clearly less (economic) momentum than Fed participants had anticipated," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. "We expect the Fed will probably try to keep pumping in stimulus in some form in the second half of the year."

Labor

Related

Democracy Now!

AFL-CIO Elects 1st Woman Pres. & African American Sec.-Treasurer. Will It Organize Amazon?

AFL-CIO Elects 1st Woman Pres. & African American Sec.-Treasurer. Will It Organize Amazon?

Democracy Now!

Strike Wave in the U.S.? Labor Historian Nelson Lichtenstein on Union Drives & Worker Revolts

Strike Wave in the U.S.? Labor Historian Nelson Lichtenstein on Union Drives & Worker Revolts

Just Solutions

The Great Resignation: What is the Future for Labor?

The Great Resignation: What is the Future for Labor?

Economic Update with Richard D. Wolff

Economic Update: Labor & Capitalism's Rise & Fall

Economic Update: Labor & Capitalism's Rise & Fall

Proud Partners