Stock market jumps on report of steady job growth last month
It was a good day for the Dow, but the trend falls far short of bringing the U.S. back to full employment.
The New York Times
U.S. employers added 175,000 jobs in May, almost exactly the average monthly job growth over the last year, the Labor Department reported Friday, while the unemployment rate ticked up to 7.6 from 7.5 percent in April.
Economists were relieved the numbers weren’t worse, given a string of other disappointing data in recent weeks, but noted that recent job trends are nowhere close to bringing the country back to full employment.
Steady growth in hiring last month sent the stock market sharply higher.
The Dow Jones industrial average had its best day in five months. It rose 207 points, or 1.4 percent, to close at 15,248.12. That gain was surpassed this year only by its 2.4 percent rise Jan. 2.
Boeing, a Dow component, led the index higher with a gain of $2.73, or 2.7 percent, to $102.49. Twenty-six of the 30 stocks in the Dow rose.
The Standard & Poor’s 500 index rose 20.82 points, or 1.3 percent, to 1,643.38. The Nasdaq composite rose 45.16 points, or 1.3 percent, to 3,469.22.
At the current pace of job and population growth, it would take nearly five years to get the economy back to the low unemployment rate it enjoyed when the recession officially began in December 2007.
“I feel hopeless, and that just makes it hard,” said Sherry Lockhart, 53, of Enumclaw. She was laid off by the state’s Liquor Control Board a year ago, when voters privatized liquor sales, and her jobless benefits are about to be slashed as a result of federal spending cuts. “I just feel I’ve done my best over the years, and I feel like I haven’t failed the system. The system has failed me, and millions more (people).”
Still, the cause behind the uptick in the unemployment rate, at least, was mildly encouraging: More people joined the labor force, perhaps indicating that Americans who have been sitting on the sidelines feel they finally have a chance at finding a job.
“It’s a decent report, but it’s not by any means robust,” said Conrad DeQuadros, senior economist at RDQ Economics, a research firm.
“It’s certainly not strong enough to get the Fed to make any significant changes at its meeting in June,” he said, referring to speculation the Federal Reserve might consider tapering its stimulus measures if the jobs numbers came in strong.
Consumers have also been relatively upbeat recently. A New York Times/CBS News poll conducted May 31 to June 4 found that 39 percent of respondents think the condition of the economy is very or fairly good, the highest share saying this since President Obama took office and even since the recession began.
Despite signs of optimism from consumers and investors, other indicators of the health of the economy and the job market have been mixed. Average weekly hours and average hourly earnings, for example, have shown little improvement in recent months, according to the Labor Department. Wages are up 2 percent from a year earlier, which bodes poorly for consumer spending.
“The wage gains are very disconcerting, and particularly strange when you see these surveys of employers who say they have positions they can’t fill,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “That means they should be bidding up wages.”
Wage growth may be held back by the composition of new jobs being created, he said, as there are a lot of jobs being added in low-paying sectors like retail. Restaurants and bars, for example, have added 337,000 jobs over the last year, and that category now makes up about 7.6 percent of all payroll jobs, its largest share on record.
The other big industry to add jobs in May was professional and business services, particularly in temporary-help services. Temp-services employment has been growing for six straight months now, and as of May, about 2 percent of all U.S. jobs were in the sector.
The federal government, on the other hand, lost 14,000 jobs in May, presumably a result of the across-the-board federal spending cuts, known as the sequester, implemented by Congress in March.
“With the recovery gaining traction, now is not the time for Washington to impose self-inflicted wounds on the economy,” said Alan Krueger, Obama’s chairman of the Council of Economic Advisers, in a statement. “The administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to create middle-class jobs, such as by rebuilding our roads and bridges and promoting American manufacturing.”