U.S. Employment Data Offers Hope amid Crisis

Sources: BusinessWeek.com: Jobs Report Is an Upside Surprise; Rueters.com: Unemployment Hits Record but Job Losses Slow; Rueters.com: Take-A-Look: World Stocks, Oil Surge After US Jobs Data

While analysts had forecasted that 550,000 jobs would be lost in May, this figure topped out at 345,000. However, the unemployment rate reached 9.4 percent, the highest since July 1983, up from 8.9 percent in April. Analysts had expected it to peak at 9.2 percent. Still, this rise was due to an increase in new entrants to the labor force, and a drop in employment rates. Last month saw an increase to the labor force of 350,000. The increase in April was only 120,000.

82,000 fewer positions were also shed during April and March than previously reported. Jobs losses in April were revised from 539,000 to 504,000, and in March from 699,000 to 652,000.

The government’s $787 billion stimulus package likely saw the dip in payrolls in construction industries up from 108,000 in April to 59,000 in May. Further, the service-providing industry, which shed 230,000 jobs in April, lost 120,000 positions last month. Health care also posted gains while government employment generally remained consistent. The rise in job losses in the manufacturing sector from 154,000 in April to 156,000 in May likely followed Chrysler’s bankruptcy filing which resulted in a string of auto plant shutdowns.

Long-term unemployment has continued to grow. 3.95 million Americans have now been unemployed for at least six months. In April, this figure was only 268,000. While jobs continue to be lost in large numbers, output may increase in the second half of the year so long as the improvement rate persists.

The better-than-expected jobs report has buttressed hopes that the worst is behind the U.S. economy. World stocks saw an increase on Friday. Bond yields also increased. Further, resource and commodity prices have escalated and the jobs data has seen oil prices reach seven-month highs.

Discussion Question:
1) How might the U.S. jobs report generate optimism about other economies?
2) In what ways will the financial crisis permanently alter the landscape of the job market in America?