US Job Loss Figures Down

WASHINGTON - The nation's unemployment rate increased by half a percentage point to 9.4 percent in May, the Labor Department reported Friday, yet the agency reported in a separate survey that the pace of job losses appears to have slowed substantially.

In its good news-bad news report, the Bureau of Labor Statistics said that employers shed 345,000 jobs in May, far fewer than the 500,000-plus expected in consensus forecasts. Statisticians also revised April's figures to indicate 504,000 jobs lost, not the 539,000 that first had been estimated.

The strong May numbers and the revision of April's suggest that the pace of job losses is moderating. They point to an easing of the recession that began in December 2007 and has destroyed more than 6 million jobs. In May, 14.5 million Americans were unemployed.

Alan Levenson, chief economist for investment manager T. Rowe Price Associates in Baltimore, said the labor market was showing the first signs of recovery but he cautioned that not all was good in Friday's report. For example, the length of the average workweek fell in May to 33.1 hours, the lowest it's been since recordkeeping began in 1964.

The "dip in weekly hours, meager gain in hourly earnings" suppress production and income and carry implications for the economic recovery, he said in a research note. Rather than fire workers, many employers are slashing hours, freezing pay and requiring employees to take unpaid leave, all of which affect the quality of work life.

"The slowing of employment losses is certainly welcomed news. Before we celebrate, however, note that unemployment at 9.4 percent is substantially higher than what was expected in even the most pessimistic forecasts a few months ago," said Lawrence Mishel, the president of the liberal Economic Policy Institute in Washington. "Moreover, the pace of wage growth is less than half of what it was last year. Together, these trends suggest we're heading for very high unemployment and a subdued recovery."

Just as the slower pace of job losses was unexpected, so was the leap in the unemployment rate. Consensus forecasts expected that number to be around 9.2 percent and it came in at 9.4 percent, the highest since August 1983. Even that number doesn't fully capture the pain that's being felt across the American heartland.

When part-time workers who can't find full-time jobs and laid-off workers who've simply stopped looking for employment are factored in, the unemployment rate soars to 16.4 percent, the government report said.

Federal Reserve Chairman Ben Bernanke told Congress this week that the economy is expected to pull out of recession late this year but that job losses are expected to continue into next year. Many economists think that the unemployment rate will top 10 percent before it reverses course.

That's why Friday's report is such a mixed bag.

"Rising unemployment rates are consistent with slower wage growth, and thereby weakness in personal income and ultimately, consumer spending," John Silvia, chief economist for the Charlotte, N.C.-based bank Wachovia, wrote in a note to investors. "The duration of unemployment continues to rise, suggesting continued stress on unemployed workers, who realize their unemployment will be longer than they feared. Rising duration suggests higher consumer credit delinquency rates."

In a novel change, three sectors of the economy added jobs in May. Education and health care combined to add 44,000 jobs, while leisure and hospitality was also in positive territory, albeit by a small 3,000 jobs.

For job-losing sectors, the story was familiar.

"Steep job losses continued in manufacturing, while declines moderated in construction and several service-providing industries," the BLS report said.

Construction firms shed 59,000 jobs, although that was almost half of April's 108,000 cuts. Factory posts fell 156,000, on pace with the previous month, and retailers trimmed another 17,500 positions. Government, a rare driver in April, posted a net loss of 7,000 jobs in May.

http://www.kansascity.com/444/story/1235377.html

So it looks like by all accounts, according to those in the know, this is great because it shows that job losses are slowing and we may be coming out of the recession however, i wonder if they actually took 'reality' in to account when proclaiming this as good news?

I mean, maybe these figures are lower because everyone these companies can lose, have already lost their jobs?

There are only so many employees companies can cut, perhaps these lowered job loss numbers just means that everyone who can get fired or laid off, already has been?

Regards,

Lee