Friday, June 7, 2013

The unemployment rate ticked up, and that's okay

The U.S. Department of Labor released establishment and household employment estimates for May this morning, which indicated that the country gained 175,000 jobs on a seasonally adjusted basis but that the unemployment rate ticked up slightly from 7.5 to 7.6 percent.

The payroll jobs figure is modestly good news and is consistent with the slow and uneven growth in the economy. As in previous months, the loss of jobs from government austerity continues to be a drag on job growth. The sequestered federal government shed 14,000 jobs in May (on top of 31,000 jobs lost in the previous two months); state governments dropped another 2,000 employees. Job growth in the goods producing sector (manufacturing, construction, and mining) was flat. Over the last year, goods producers have only added 250,000 jobs, while service providers have added nearly 2 million.

There is also some good news in the higher unemployment rate. The number of unemployed people rose by 101,000 on a seasonally adjusted basis, which seems bad until you consider that the increase was due to a surge in the number of people who entered the labor force and were looking for work. The survey data indicate that 420,000 people joined the labor force in May.

2 comments:

Andrew Brod said...

It's true that there's good news in the slight bump in the unemployment rate, but it's only fair to note that we've seen similar good news more than once in this oh-so-slow recovery. This isn't the first time that people have entered the labor force because of good news about employment prospects, only to be temporarily counted as unemployed because they hadn't yet found jobs. A temporary bump in the unemployment rate can be a harbinger of sustained declines thereafter.

But that's not what we've seen so far. In those earlier instances, the good news was ultimately not so good, and the bump didn't lead to much improvement. As always, we'll have to wait a few months to see if this was just one more example of the labor market teasing job seekers, or finally a trend toward sustained improvement.

Andrew Brod said...

On the other hand, it's nice to be disappointed about 175K. It's not very good, but it's a heck of a lot better than we were seeing back in 2010.