Payrolls in U.S. Rise Less Than Forecast, Jobless Rate Falls
By Shobhana Chandra
June 5 (Bloomberg) -- Employment by American companies roseless than forecast in May and workers dropped out of the laborforce, signaling the world’s largest economy is still reliant ongovernment assistance to boost growth.
Private payrolls rose by 41,000, Labor Department figuresshowed yesterday in Washington, trailing the 180,000 gainforecast by economists in a Bloomberg News survey. Includinggovernment workers, employment rose by 431,000, boosted by ajump in hiring of temporary census workers. The jobless ratefell to 9.7 percent from 9.9 percent.
“Hiring just can’t gather momentum right now,” said DavidSemmens, an economist at Standard Chartered Bank in New York,whose forecast of a 30,000 gain in private payrolls was closestamong survey participants. “This recovery will continue todisappoint through 2010.”
Stocks fell and Treasuries surged yesterday as the reportraised concern the economy was susceptible to shocks such as theEuropean debt crisis. The figures may deal a blow to the Obamaadministration as the Congressional elections approach, andbolster forecasts the Federal Reserve will keep its pledge tohold interest rates low for “an extended period.”
Estimates of 82 economists surveyed by Bloomberg for totalpayrolls ranged from 220,000 to 750,000. Last month’s gainfollowed a 290,000 increase in April employment.
Economists also forecast the jobless rate would fall 9.8percent. Unemployment reached a 26-year high of 10.1 percent inOctober. The decline in joblessness last month reflected a322,000 drop in the labor force as Americans grew discouragedover hiring prospects.
Delayed ‘Handoff’
“The handoff from the public sector to the private sectorisn’t happening at the pace that many people would have expectedby now,” John Silvia, chief economist at Wells Fargo SecuritiesLLC in Charlotte, North Carolina, said yesterday in an interviewon Bloomberg Television. “We have an improving economy, but itisn’t improving as fast” as projected. Smaller job gains mean“continued pressure on the American consumer,” he said.
The Standard & Poor’s 500 Index dropped 3.4 percentyesterday to close at 1,064.88, the lowest level since Feb. 8.The 10-year Treasury note rose, pushing the yield down to 3.20percent at 4.54 p.m. in New York from 3.37 percent late theprior day.
Temporary census jobs accounted for 411,000 of the Mayincrease in payrolls, leaving the ex-census figure at 20,000.The hiring of temporary workers to conduct the decennialpopulation count probably peaked last month, economists said.
Temporary Workers
The unwinding of census employment may keep distorting thepayroll figures for months as the government dismisses workerswhen the count is completed. For that reason, economists sayprivate payrolls, which exclude government jobs, will be abetter gauge of the state of the labor market for much of 2010.
About 150,000 to 200,000 jobs are needed to trim theunemployment rate, which is “a key focus for theadministration,” said Bill Gross, who runs the world’s biggestbond fund at Pacific Investment Management Co. in Newport Beach,California. “Job growth is going to be anemic,” he said in aninterview yesterday with Bloomberg Radio’s Tom Keene on“Bloomberg on the Economy.”
President Barack Obama said the employment report showedthe economy was moving in the right direction.
“Our recovery is still in its early stages,” thepresident said while visiting a truck factory in Hyattsville,Maryland, yesterday.
Factory Gains
Manufacturing remained a bright spot as factories increasedpayrolls by 29,000 in May, a fifth straight gain. The averagenumber of hours worked, overtime, and earnings also climbed.
Fed Chairman Ben S. Bernanke this week said joblessness isamong the “important concerns” for the recovery.
“One particularly difficult issue is the continued highrate of unemployment,” Bernanke said at a forum at the ChicagoFed’s Detroit office. “High unemployment imposes heavy costs onworkers and their families, as well as on our society.”
Hewlett-Packard Co., the world’s largest personal-computermaker based in Palo Alto, California, this week said it’ll slashabout 3,000 jobs over several years.
Not all the data was bleak. Earnings per hour for thosewith jobs climbed 0.3 percent on average to $22.57 last month.Pay rose 1.9 percent from May 2009, up from a 1.8 percentincrease in the year to April.
The so-called underemployment rate -- which includes part-time workers who’d prefer a full-time position and people whowant work but have given up looking -- decreased to 16.6 percentfrom 17.1 percent.
The number of temporary workers increased 31,000, an eighthconsecutive gain. Employment at temporary-help agencies oftenpicks up before companies take on permanent staff.
To contact the reporter on this story:Shobhana Chandra in Washington at schandra1@bloomberg.net
Last Updated: June 5, 2010 00:01 EDT