U.S. Payrolls Fall, Unemployment Rate Climbs to 5.5%

[hipmatt]

http://www.bloomberg.com/apps/news?pid=20601087&sid=ab3FgkTPA2YM&refer=home

By Shobhana Chandra

June 6 (Bloomberg) — The U.S. lost jobs in May for a fifth month and the unemployment rate rose by the most in more than two decades, signaling that the world’s largest economy is stalling.

Payrolls fell by 49,000 after a 28,000 drop in April, the Labor Department said today in Washington. The jobless rate increased by half a point to 5.5 percent, higher than every forecast in a Bloomberg News survey, partly because an influx of teenagers into the workforce exceeded jobs available.

Treasuries climbed and the dollar slid after the report indicated the economy will struggle to rebound from the weakest expansion in five years. Continental Airlines Inc. and UAL Corp.’s United Airlines are among companies announcing job cuts this week as businesses grapple with soaring energy costs and slowing demand.

“The labor market is still deteriorating,” said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts. “The story is, we’re still on the verge of a recession” and “at best, the economy is growing very, very slowly.”

Ten-year Treasury yields dropped to 3.98 percent at 9:50 a.m. in New York, from 4.04 percent late yesterday. The Standard & Poor’s 500 stock index dropped 0.9 percent to 1,391.69.

Deeper Cuts

Revisions subtracted 15,000 from payroll figures previously reported for March and April.

Economists had projected payrolls would drop by 60,000 after a previously reported 20,000 decline the prior month, according to the median of 79 forecasts in a Bloomberg News survey. The jobless rate was forecast to rise to 5.1 percent.

The Democratic and Republican candidates for president expressed concern about the surge in unemployment and touted their economic proposals to help spur the economy.

“Today’s jobs report is deeply troubling,” Democratic Senator Barack Obama of Illinois said in a statement today. He said the figures underscored the need for his proposed reduction in taxes for middle-income earners. Republican Senator John McCain of Arizona urged lawmakers to pass legislation helping to stem home foreclosures.

The unemployment rate, the highest since October 2004, reflected an expansion of the workforce, led by teenagers. The increase in the rate was the biggest since February 1986.

Determining a Recession

A loss of jobs is one of the criteria used by the National Bureau of Economic Research to determine when recessions begin and end. The group, the official arbiter in the U.S., defines contractions as a “significant” decrease in activity over a sustained period of time. Changes in sales, incomes, production and gross domestic product are also considered.

Payrolls shrank by 324,000 workers in the first five months of the year. In 2007, the economy generated 91,000 new jobs a month on average.

Factory payrolls fell 26,000 after declining 49,000 in April. Economists had forecast a drop of 40,000. The decrease included a drop of 7,500 computer and electronics manufacturing jobs. Auto factories added 4,400 workers.

General Motors Corp. has said 19,000 workers, or about 26 percent of its union workforce, accepted the latest offer to leave, and most of those will stop working by July 1. Ford Motor Co. will trim salaried-employee costs by 15 percent by eliminating contract workers and not filling open jobs.

Impact of Housing

The protracted housing slump and resulting collapse in subprime lending were also reflected in today’s report. Payrolls at builders fell 34,000 after decreasing 52,000. Financial firms decreased payrolls by 1,000, after a gain of 1,000 the prior month.

Service industries, which include banks, insurance companies, restaurants and retailers, added 8,000 workers after increasing by 72,000 in April. Retail payrolls decreased by 27,100 after a drop of 38,700.

Government payrolls increased by 17,000 after a gain of 12,000, indicating the total decline in private payrolls was 66,000.

The number of Americans receiving jobless benefits surpassed 3.1 million in May for the first time in four years, indicating employees that are being let go are having a more difficult time finding new jobs.

Consumer confidence last month sank to the lowest level in more than 15 years as the employment outlook deteriorated, according to a report from the Conference Board, a New York research group.

`Significant Headwinds’

“Households continue to face significant headwinds, including falling house prices, a softer job market, tighter credit and higher energy prices,” Federal Reserve Chairman Ben S. Bernanke said in a speech this week. The second quarter may be “relatively weak.”

The average work week was unchanged at 33.7 hours and the factory work week also remained unchanged at 41 hours. Overtime decreased to 3.8 hours from 4 hours. That brought the average weekly earnings up by 0.3 percent to $604.58 last month.

Workers’ average hourly wages rose by 5 cents, or 0.3 percent, to $17.94. Economists surveyed by Bloomberg had forecast a 0.2 percent increase from the prior month and a 3.4 percent gain for the 12-month period.

Declines in employment signal consumer spending, which grew in the first quarter at the slowest pace since the 2001 recession, will keep slowing.

“The customer is clearly under pressure when it comes to higher gas and food prices,” Thomas Schoewe, chief financial officer at Wal-Mart Stores Inc., told reporters yesterday.

Wal-Mart, the world’s largest retailer, and Costco Wholesale Corp. yesterday said sales climbed more than analysts estimated as shoppers sought discounts to offset soaring food and fuel bills.

Airlines are getting throttled by higher fuel costs.

“The airline industry is in a crisis,” Continental’s Chief Executive Officer Larry Kellner and President Jeff Smisek said in a memo to the Houston-based carrier’s employees. The reductions “are necessary to secure our future.”

To contact the reporter on this story: Shobhana Chandra in Washington [email protected]

[blue_sky]

It’s actually substantially worse than that. The BLS birth / death model is still calculating substantial job creation in sectors that are completely in the tank. For example: 42,000 estimated new jobs in construction this month as a result of new construction companies that are assumed to be being created. What a crock! We are probably losing more small construction companies in this environment than we are gaining them, so that number should be negative.

More details: http://globaleconomicanalysis.blogspot.com/2008/06/may-jobs-unemployment-skyrockets-to-55.html

[blue_sky]

It’s actually substantially worse than that. The BLS birth / death model is still calculating substantial job creation in sectors that are completely in the tank. For example: 42,000 estimated new jobs in construction this month as a result of new construction companies that are assumed to be being created. What a crock! We are probably losing more small construction companies in this environment than we are gaining them, so that number should be negative.

More details: http://globaleconomicanalysis.blogspot.com/2008/06/may-jobs-unemployment-skyrockets-to-55.html

[blue_sky]

It’s actually substantially worse than that. The BLS birth / death model is still calculating substantial job creation in sectors that are completely in the tank. For example: 42,000 estimated new jobs in construction this month as a result of new construction companies that are assumed to be being created. What a crock! We are probably losing more small construction companies in this environment than we are gaining them, so that number should be negative.

More details: http://globaleconomicanalysis.blogspot.com/2008/06/may-jobs-unemployment-skyrockets-to-55.html

[blue_sky]

It’s actually substantially worse than that. The BLS birth / death model is still calculating substantial job creation in sectors that are completely in the tank. For example: 42,000 estimated new jobs in construction this month as a result of new construction companies that are assumed to be being created. What a crock! We are probably losing more small construction companies in this environment than we are gaining them, so that number should be negative.

More details: http://globaleconomicanalysis.blogspot.com/2008/06/may-jobs-unemployment-skyrockets-to-55.html

[blue_sky]

It’s actually substantially worse than that. The BLS birth / death model is still calculating substantial job creation in sectors that are completely in the tank. For example: 42,000 estimated new jobs in construction this month as a result of new construction companies that are assumed to be being created. What a crock! We are probably losing more small construction companies in this environment than we are gaining them, so that number should be negative.

More details: http://globaleconomicanalysis.blogspot.com/2008/06/may-jobs-unemployment-skyrockets-to-55.html

[gdcox]

Perhaps they are referring to the birth of foreclosure stripping companies.

[gdcox]

Perhaps they are referring to the birth of foreclosure stripping companies.

[gdcox]

Perhaps they are referring to the birth of foreclosure stripping companies.

[gdcox]

Perhaps they are referring to the birth of foreclosure stripping companies.

[gdcox]

Perhaps they are referring to the birth of foreclosure stripping companies.

[bsrsharma]

Economic Anxiety Disorder

The Economy? Words Fail Me.

Must see Video of Assistant Treasury Secretary Phillip Swagel’s briefing on the ailing US economy.

Think you’re worried about the economy? Phillip Swagel is a wreck.

The assistant Treasury secretary for economic policy, Swagel came out for his monthly economic briefing yesterday, 90 minutes after the Labor Department reported that the country had shed jobs in June for the sixth straight month….

http://www.washingtonpost.com/wp-dyn/content/article/2008/07/03/AR2008070303317.html

[bsrsharma]

Economic Anxiety Disorder

The Economy? Words Fail Me.

Must see Video of Assistant Treasury Secretary Phillip Swagel’s briefing on the ailing US economy.

Think you’re worried about the economy? Phillip Swagel is a wreck.

The assistant Treasury secretary for economic policy, Swagel came out for his monthly economic briefing yesterday, 90 minutes after the Labor Department reported that the country had shed jobs in June for the sixth straight month….

http://www.washingtonpost.com/wp-dyn/content/article/2008/07/03/AR2008070303317.html

[bsrsharma]

Economic Anxiety Disorder

The Economy? Words Fail Me.

Must see Video of Assistant Treasury Secretary Phillip Swagel’s briefing on the ailing US economy.

Think you’re worried about the economy? Phillip Swagel is a wreck.

The assistant Treasury secretary for economic policy, Swagel came out for his monthly economic briefing yesterday, 90 minutes after the Labor Department reported that the country had shed jobs in June for the sixth straight month….

http://www.washingtonpost.com/wp-dyn/content/article/2008/07/03/AR2008070303317.html

[bsrsharma]

Economic Anxiety Disorder

The Economy? Words Fail Me.

Must see Video of Assistant Treasury Secretary Phillip Swagel’s briefing on the ailing US economy.

Think you’re worried about the economy? Phillip Swagel is a wreck.

The assistant Treasury secretary for economic policy, Swagel came out for his monthly economic briefing yesterday, 90 minutes after the Labor Department reported that the country had shed jobs in June for the sixth straight month….

http://www.washingtonpost.com/wp-dyn/content/article/2008/07/03/AR2008070303317.html

[Author]

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