US jobless rate goes up in weakest month for hiring since September

• Jobs created fall 39,000 short of predictions • High energy prices take toll on economy • No evidence for impact of severe weather US employers hired far fewer workers than expected last month, pushing up the jobless rate, as high energy prices and the effects of Japan’s earthquake took their toll on the world’s largest economy. Companies added 54,000 workers last month, the labour department said, the weakest reading since September and only a third of the 150,000 increase forecast by Wall Street. Revised figures for March and April mean that 39,000 fewer jobs were created than previously estimated. Private employment rose by 83,000, the smallest increase since last June. The overall jobless rate picked up to 9.1% from 9%. The labour department said last month’s tornadoes and flooding in the midwest and the south did not materially affect data collection. It said that while some workers in those areas may have been temporarily displaced from their jobs, it found “no clear impact of the disasters on the national employment and unemployment data for May”. James Knightley at ING said the figures were “undeniably weak” but saw reasons for optimism. “In terms of what is driving the weakness in the labour market we feel that the lagged effects of rising energy costs plays a major part,” he said. “This has hurt household spending power since they are spending more of their income on fuel and gasoline, leaving less money to spend on other goods and services. This is damaging businesses from the revenue side, while their costs too have been increasing because of higher fuel bills. “Consequently, with profits being squeezed, hiring has slowed and job layoffs have increased. However, retail gasoline prices have since fallen 10% in response to developments in oil prices. This should help improve household finances and spending, while also boosting confidence.” He added he hoped that employment and the overall economy would improve in the second half of the year. “However, the fact that we are still so far away from the 5 unemployment rate that Federal Reserve chairman Ben Bernanke has suggested is desirable implies that rate hikes remain a long way off. That said, we still believe the first rate hike will come earlier than October 2012, which is what Fed funds futures are currently pricing.” Kathy Bostjancic, director for macroeconomic analysis at research organisation the Conference Board, talked of “choppiness” in the economy. “With households worried about high gas and grocery prices, and the slow pace of wage gains, spending could even slow a little more this summer,” she said. “Employers spent a great deal of time and attention reducing costs over the past few years and are reluctant to add to their cost structure unless they can be certain the economy will not hit a soft patch. This degree of caution could remain in evidence right through Labour Day.” US unemployment and employment data US economy Economics Ben Bernanke United States Julia Kollewe guardian.co.uk

Posted by on June 3, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.