Jobs Reports Show Slow Gains
The latest report from payroll processor ADP showed that private companies added a modest 55,000 jobs in May, less than most economists were expecting. Separately, the Labor Department reported that the number of U.S. workers filing new claims for unemployment dipped 10,000 to 453,000 for the week ending May 29. What's it all mean? Diane Swonk fills us in.
-Nelson Wang
Contrasting Reports
The ADP preliminary report on employment confirms that hiring continued in the private sector in May, albeit at a slower pace than they saw in April. Small business hiring is beginning to turn around, but still lags the overall economy by a substantial margin.
The ADP report contrasts forecasts for a sharp acceleration in employment, buoyed by a surge (maybe as much as 400,000 jobs) in Census hires by the federal government. The ADP report represents a broader survey than the initial estimate of payroll employment by the government, and has under estimated gains -- Âwhich could top 500,000 in May -- by the government for the last three months by a substantial margin. Household employment, which better captures shifts by the self-employed, has also moved more dramatically into the black in recent months.
Economy Continues to Fall Short
No matter how the data is cut, however, the U.S. economy continues to fall short on the employment front. Unemployment is expected to remain particularly high as workers who gave up looking for a job during the recession rejoin the labor force and compete with new college grads to find jobs.
Separately, unemployment claims continued to edge down in the most recent week, but remain disturbingly high. At least a portion of those claims, however, can be attributed to continuing claims rather than new fires.
Jobs Recovery Will Take Time
The recovery is beginning to get some legs, and become more self-feeding. Much of the spurt in employment created by Census hires, however, will be short-lived. It will still be some time (two to three years) before we recoup the jobs lost, let alone bring the unemployment rate down to a level that anyone would consider comfortable.
What if I am wrong? Then pop the champagne corks and celebrate. I would gladly welcome a much more robust labor market, with lower unemployment, than is currently forecast over the next several years.
Diane Swonk, chief economist at Mesirow Financial, talks to CBS MoneyWatch twice a week about the day's top economic news and developments. Her responses are edited for clarity and length.