The Labor Department said that while Nonfarm payrolls increased by 431,000 jobs, private employment, a barometer of underlying labor market strength, only climbed 41,000. This data is well below expectations, but a potential bright spot is that company workforces are being spread thin and companies may have to hire more in order to increase output. “We do not yet have the makings of a double-dip, and we still believe that private sector job creation will gradually improve over the rest of the year,” said Nigel Gault, Chief U.S. Economist at IHS Global Insight in Lexington, Massachusetts.
The Chief Executive of Walmart said the still-weak U.S. labor market is affecting customers even as the company plans to hire more than 500,000 workers in the next five years in the United States and around the globe. “I would not say that I could predict that there will be any decline” in the economy,” Walmart CEO Mike Duke said. “But I still sense a great deal of pressure on the customer base.”
Last month, the Government hired 411,000 workers for the Census, the biggest increase in payrolls since March 2000. It was the fifth monthly increase in employment. The Labor Department report also showed the unemployment rate dropped to 9.7 percent from 9.9 percent in April, although the decrease reflected workers leaving the labor force. Payrolls had been expected to rise 513,000, with the jobless rate dipping to 9.8 percent.
The high jobless rate suggests that the U.S. Federal Reserve will not raise benchmark interest rates anytime soon.
The economy has grown for three straight quarters and the recovery continues on a moderate upward path. Economic growth has been insufficient to bring the 15 million jobless Americans back into the work force, 46 percent have been without a job for six months or more in May. With unemployment still so high, many Americans are relying on the Government to help for basics. In March, a record 40.2 million people were receiving food stamps, the Agricultural Department said on Friday.