The labor market took a turn for the worse in May. According to BLS, the unemployment rate rose to 9.1% as only 54,000 jobs were added in May. And the number of jobs created in the previous two months was revised downward. Granted, this is better than losing jobs. But we are supposed to be in a recovery. According to the Dow Jones Newswires, economists had expected at least 160,000 new jobs and an unemployment rate of 8.9%. In part the unemployment rate went up because more people were looking for work. The civilian labor force went up by over 270,000.
Some see the numbers as somewhat of an anomaly. As the New York Times notes:
The lackluster employment figures for May, as in months past, are largely attributed to temporary factors — like the automotive supply chain disruption caused by the Japanese earthquake and tsunami, and the severe tornadoes that shuttered businesses in the Midwest.
Economists are hopeful that as these troubles pass, a robust recovery will finally burrow out from beneath the rubble.
“I do think there’s more strength in the economy than recent numbers have been indicating,” said Augustine Faucher, director of macroeconomics at Moody’s Analytics. “I realize that’s not much consolation for people who are already out of work.”
There was interesting news concerning the involuntary underemployed. The total number of involuntary underemployed (part workers for economic reasons) declined in May. However, that was mostly due to a decline in the number of persons who could only find part time work. The number of workers on part time because of slack production increased. This give credence to the notion that the employment drop is temporary — due to short term slow down in production rather than a permanent switch to part-time. However, as the second chart below shows, the rate of involuntary underemployment continues to be at historic highs for the post-WWII era.