In May 2010, the US unemployment rate fell to 9.7%. This was slightly better than market expectations for the rate to ease to 9.8% from 9.9% in April. The US unemployment rate had moved up from a low of 4.4% in March 2007, to a peak of 10.1% in October 2009. Since October 2009 the rate of unemployment has generally eased lower, although it has been kept still relatively high by an increase in the labour market participation rate (see chart attached).
During the month non-farm payrolls rose by a very impressive 431 000, although this was below market expectations for a rise of 536 000. The previous two months data (March and April 2010) was revised from an initially reported increase of 520 000 to an increase of 498 000; a drop of 22 000 relative to what was previously reported. Hiring for the decennial government census added a massive 411 000 temporary workers in the month. Over the past three months the US government has added a total of 564 000 temporary jobs associated with the 2010 Census. Unfortunately these gains will be reversed over the coming months. The private sector gained a very modest and very disappointing 41 000 jobs in May, which was well below expectations for an increase of 180 000.
Since December 2007 (when the US recession officially started), payroll employment has fallen by a net total of 7.38 million, or 5.4%.
During the month:
- Manufacturing employment increased by 29 000 over the month. Factory employment has risen by 126 000 over the past 5 months. Within manufacturing, both fabricated metals and machinery added jobs in May.
- Temporary help services added 31 000 jobs over the month; employment in the industry has risen by 362 000 since September 2009.
- Employment in mining continued to increase in May, with a gain of 10 000. Support activities for mining accounted for 8 000 of the over-the-month increase. Since October 2009, mining employment has expanded by 50 000.
- Health care employment was little changed in May (+8 000). Over the prior 12 months, health care employment had increased by an average of 20 000 per month.
- In May, employment in construction declined by 35 000, largely offsetting gains in the industry in the prior 2 months. May's job loss was spread throughout the sector and probably reflects building activity post the housing tax incentive.
- Employment in other private-sector industries, including wholesale trade, retail trade, transportation and warehousing, information, financial activities, and leisure and hospitality showed little or no change in May.
- Government employment rose by 390 000 in May. The Federal government hired 411 000 temporary workers for Census 2010, bringing total temporary census staffing during the payroll survey reference period to 564 000. Employment in state government excluding education decreased by 13 000.
The US job market was clearly decimated during the recession, certainly relative to previous recessions. Although, the employment levels are now trending in the right direction (the 6-month average rate of change in payrolls is now positive), it is likely to take a number of years to fully recover, especially when one considers that much of the current growth has been driven by the 2010 Census or private sector temporary work and not really by private sector full-time employment. More positively, though, given the current low base of employment and low inventory level, any sustained rise in final demand, could fairly quickly reflect in at least modest job gains.
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