Rent-to-own News - Jobs report: Hiring slows, unemployment rises

In yet another alarm bell of a weakening U.S. economy, the job market took a disappointing turn in May.

The economy gained a mere 54,000 jobs in the month, a significant slowdown from 232,000 jobs added to payrolls in April, the government reported Friday.

The report was a major disappointment to economists who were expecting a gain of 170,000 jobs, according to CNNMoney. Most believe the economy needs to add about 150,000 jobs a month just to keep pace with population growth.

"It is now pretty clear that the economy ran into a brick wall last month," said Paul Ashworth, chief U.S. economist for Capital Economics, in a research note. "The extent of this slowdown is becoming a big concern."

The unemployment rate worsened to 9.1% from 9% in April. Economists had predicted the rate would improve to 8.9%.

Adding to the weakness was an anomaly in the way the numbers are compiled. The payroll number and the unemployment rate are tallied through separate surveys of businesses and households, which typically c over a four-week period. But this year, April's report had a five-week reporting period, pulling in some seasonal summer jobs that would normally show up in May.

The leisure and hospitality industry, for example, lost 6,000 jobs in May after a jump of 32,000 jobs in April.

Economy at risk

"There are always ebbs and flows to the jobs market," said Scot Melland, CEO of Dice
AdvertisementHoldings, a provider of career Web sites. "One month does not a trend make. This comes on the back of three strong months of jobs growth."

But most economists thought the report showed some fundamental weakness in the job market, causing widespread pessimism about a hiring rebound in the near future.

"Is this transitory? The answer is no," said Lakshman Achuthan, managing director of Economic Cycle Research Institute. He said this report could raise further doubts among employers about the strength of the recovery, which could cause them to pull back even more on hiring plans.

Employers getting jittery

Businesses have pulled back on hiring since higher prices of gas, food and other commodities pushed up costs and forced consumers to cut spending on other items, hurting demand for employers' products.

"Today's report clearly indicates that rising raw material and energy prices are taking a toll on the economy," said Chad Moutray, chief economist, National Association of Manufacturers.

Businesses added 83,000 jobs in May, less than half what what economists had been expecting. It was the weakest level of business hiring in 11 months and comparable to the disappointing report by payroll processing firm ADP earlier this week that signaled a sharp decline in the p ace of hiring.

The extent of the cutback in hiring was widespread. Manufacturers cut jobs for the first time since October, as the auto sector was impacted by supply disruptions from the Japanese earthquake earlier this year.

Retailers, who had one of their best hiring months in years in April, pulled back by trimming nearly 9,000 jobs. Overall, nearly half of the industries tracked by the Labor Department cut payrolls during the month, the most widespread job losses in eight months.

Things were even worse in the public sector, as the government cut 29,000 workers during the month, with most of the decline coming from local governments. Both teachers and other municipal workers such as fire fighters and police lost their jobs due to budget cutbacks. The tight budgets have caused state and local governments to trim 175,000 workers off their payrolls over the last six months.

A series of negative employment reports recently have raised concerns among economists that hiring is losing steam after a good start to the year. Revisions for March and April shaved another 39,000 jobs off of total payrolls for the year, bringing year-to-date job growth to 783,000 workers.