In May, 175,000 jobs were added, more than the 150,000 minimum required for healthy economic growth. The unemployment rate rose slightly to 7.6%, a sign that more people were encouraged enough to return to the labor force. The April report was revised down, from 165,000 to 149,000, but the March report was revised up from 138,000 to 142,000. Investors signaled their approval by adding 200 points to the Dow.
The Bureau of Labor Statistics reported that the Leisure and Hospitality sector (bars, restaurants and hotels) was the largest contributor, adding 43,000 jobs, while Retail Trade added 27,700 jobs. This means that consumer spending, the most important piston of the economic engine, is robust. Another big boost came from Temporary Services, which added 25,600 jobs. This is another good signs, because it means that employers who aren’t confident enough to add permanent jobs are still getting enough demand to need temporary workers.
Education and Healthcare added 26,000 jobs. Wholesale trade added 7,500 jobs, Financial Services added 4,000 jobs, and Information added 3,000 jobs. Of note, is that Construction added 7,000 jobs, another sign that the housing market continues to improve.
These industries offset minor losses in Manufacturing (-8,000), Transportation and Warehousing (-3,900), and (of course) Government (-3,000). (Source: BLS, Employment Situation Summary, June 7 2013
What This Means for You
This month’s Jobs Report is another sign of slow, steady growth. The good news is that housing and consumer spending continue to add jobs. It’s a bit of a concern that manufacturing jobs declined, so that’s something to keep an eye on.
However, it will take a loooong time for growth at this rate to absorb not only the unemployed, but those who got so discouraged they dropped out of the labor force. Expect the unemployment rate to remain at this level for another six months.
If you follow the financial news media, you’ve no doubt heard a lot about concerns over whether the Fed will begin tapering off its Quantitative Easing. This jobs report shows that it won’t happen until at least 2014. Bernanke stated that unemployment needs to drop to 6.5% before he ends QE. That’s going to take at least a year at this rate.
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