U.S. employers in May added the fewest number of workers in eight months and unemployment unexpectedly rose to 9.1 percent, underscoring Federal Reserve concerns the expansion is failing to boost the labor market.
Payrolls increased by a less-than-projected 54,000 last month, after a revised 232,000 gain in April that was smaller than initially estimated, Labor Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for payrolls to rise 165,000. The jobless rate climbed to the highest level this year from 9 percent a month earlier.
Factories cut payrolls in May for the first time in seven months, partly reflecting a drop at motor vehicles and parts producers that may have been related to a components shortage after the earthquake in Japan. Employment at retailers, leisure and hospitality companies and state and local governments also decreased during the month.
Average hourly earnings rose to $22.98 from $22.92 in the prior month, today’s report showed. The average work week for all workers held at 34.4 hours.
There is not much to like in the report, save for the fact that it's one month of bad data. The underlying details -- the drop in manufacturing and construction -- point to the overall manufacturing slowdown we've seen over the last 1-2 months. There are also signs that a Japan related hit is occurring. In addition, I'm thinking that higher fuel prices are leading companies to become more cautious as their respective bottom line takes an energy related hit. High fuel prices also dented the retail employment numbers as consumers cut back on their purchases of non-essential items.
On a scale of 1-10, I'd give this a 2.5, maybe less. The only good thing is it's only one month of data.