May jobs report: fewer workers hired, unemployment rises
NEW YORK (CNNMoney) — Businesses hired far fewer workers than expected in May, throwing into doubt the strength of the economic recovery.
Only 69,000 jobs were added in May, the weakest growth in a year. The unemployment rate rose to 8.2%, as people rejoined the labor force.
The stock market tumbled nearly 200 points in early trading on the news.
Economists surveyed by CNNMoney had expected to see employers add 150,000 jobs and the unemployment rate to remain at 8.1%.
Revisions from previous months also showed the economy gained 49,000 fewer jobs in March and April than originally thought.
Private companies sharply cut back on hiring last month, adding only a meager 82,000 jobs. Employment increased in health care, transportation and warehousing, and wholesale trade, but declined in construction. Employment was little changed in most other major industries.
The public sector continued to shed jobs, losing 13,000 in May.
“It was really shockingly low,” said Bill Dunkelberg, chief economist for the National Federation of Independent Business, who said small businesses have pulled back from hiring as customers dried up.
Economists lay the blame for the slow growth at the feet of Europe and Washington D.C. The steady drumbeat of headlines concerning Europe’ financial woes, as well as the looming fiscal cliff in the U.S., is weighing on consumer confidence. Adding to the problems is the slowdown in the Chinese economy.
Roughly 12.7 million Americans remain unemployed, and 42.8% of them have been so for six months or more. The number of long-term unemployed rose to 5.4 million, up from 5.1 million.
The overall job market still has a long way to go to climb out of the deep hole left by the financial crisis. Of the 8.8 million jobs lost, only about 3.8 million have been added back.
The rising unemployment rate contained a glimmer of good news. It increased because 642,000 people re-entered the labor force, often a sign of economic optimism.