Labor Market: How Weak?

By Andrew Paparozzi
In June 6, 2008

The Bureau of Labor Statistics (BLS) released labor market data for May. As expected we continue to lose nonfarm payroll jobs. The 49,000 loss in May was the fifth consecutive monthly decline, bringing the year-to-date drop to 324,000. The similar period a year ago witnessed a 534,000 gain. So the job market has definitely weakened along with the economy.

May’s job decline was in line with expectations. What wasn’t in line with expectations was a spike in the unemployment rate to 5.5% from 5.0% in April. Note that these data come from a different survey than payroll jobs. The May spike resulted from a surge in the labor force of 577,000 and a decline in employment of 285,000 as measured in the household survey. Year-to date, the latter is down 165,000.

The media will likely pounce on the fact this is the sharpest one-month increase for the unemployment rate in 22 years. What does this mean? Not much more than: We usually don’t see swings in the jobless rate of that magnitude. In 1986, after surging 0.5% to 7.2% in February, the unemployment rate did not get any higher the rest of the year and actually eased 0.6% by yearend. Similarly, after jumping 0.4% in April 1995 to 5.8%, the unemployment rate did not move much the rest of the year. Does that mean the unemployment rate will not move up from here? Of course it doesn’t. There is little question that the economy and job market are weak—raising unemployment to its highest level in over 3 years—and probably will get weaker. But it does mean: Lets not necessarily assume we’re falling off a cliff. We’ll discuss the latest employment data for print in our next posting.

Joseph Vincenzino

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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