Employers cut 345,000 jobs; jobless rate jumps in May
— -- Employers cut 345,000 jobs in May, fewest in eight months, as the slowing pace of job losses in construction, retail and professional services provided further evidence that the recession could be drawing to a close.
The unemployment rate, however, jumped to 9.4% — highest since August 1983 — from 8.9% in April, as 350,000 Americans entered the labor force, according to the report Friday from the Bureau of Labor Statistics. Many of those are likely previously discouraged workers who re-entered the job market, says RDQ Economics analyst John Ryding.
Investors cheered far fewer job losses last month than the 520,000 expected by analysts and many fewer than the monthly average of 643,000 the past six months. Also, the government said 82,000 fewer jobs were lost in March and April than it originally estimated.
"It looks like the economy is turning around and the depth of the recession is moderating," says John Silivia, Wachovia's chief economic analyst.
The jobless report is the latest in a batch of recent data that appear to confirm that. A survey earlier this week showed the pace of contraction in manufacturing slowing markedly while the housing market shows signs of bottoming.
A record 14.5 million people were out of work last month and 6 million jobs have been lost since the economic downturn began in December 2007. But the carnage is easing in key sectors:
— In construction, employers shed 59,000 jobs in May, about half the 110,000 lost in April.
— Retailers cut 17,500 jobs, down from about 47,000 in April.
— Professional and business services, including legal and accounting offices, cut 51,000 jobs last month, vs. 122,000 in April.
Perhaps most significantly, temporary service jobs dipped just 6,500 in May, down sharply from a 62,500 drop the previous month. Since temporary workers can be hired or fired easily, they are the first to be cut in a downturn and the first added in a recovery, Ryding says.
"It's another encouraging sign," he says.
