The headline jobs number was a big disappointment. This morning, June 4, the Bureau of Labor Statistics reported that the U.S. economy added 431,000 jobs in May. The consensus among economists called for 500,000 jobs.
And the disappointment only increased when Wall Street dug into the numbers. Of the 431,000 jobs created in May almost all were jobs created by government and almost all of those—411,000–were temporary jobs working to collect Census data. Once you net out the jobs lost in government—yes, the government does actually fire people every so often—private hiring came to just 41,000 jobs in May.
Even the one seemingly good piece of news doesn’t turn out to be quite so good. As projected by the consensus among economists before the data release, the unemployment rate fell in May to 9.7% from 9.9% in April.
But the reason for the decline was, what’s that word again, disappointing. Economists had thought that the economy would add enough jobs to send the unemployment rate lower even though some discouraged workers would have re-entered the workforce.
The reason for the decline, however, was that workers actually left the labor force in May. The labor force fell by 322,000 in the month. That was the first monthly decline since December 2009. If the labor force had remained at the size it was in April, the unemployment rate would have stayed the same at 9.9%.
The disappointment has revived fears that the U.S. economic recovery isn’t strong enough to stand up to the euro debt crisis and that we might be headed toward a double-dip recession. I still think that’s unlikely. The May numbers merely confirm what many of us have been saying about this recovery for months: It’s going to be much slower and much less robust than the normal recovery from a recession.