By Mark Huffman
ConsumerAffairs.com
June 5, 2009
The percentage of the U.S. work force out of work in May jumped to 9.4 percent, the highest rate since 1983, according to the Labor Department's monthly report. But behind that headline number was some encouraging news.
Employers cut 345,000 jobs last month -- a lot to be sure -- but fewer than anticipated. In fact, its the smallest monthly job loss since last September, when the economic meltdown began in full force.
The layoffs were spread fairly evenly across all sectors of the economy and, in nearly every case, the job losses were a stark improvement over previous months.
For example, the construction industry lost 108,000 jobs in April but only 59,000 in May. The service sector cut 230,000 jobs in April but nearly halved that number in May, to 120,000. The education and health services sector continued to expand, growing by 44,000 jobs in May after adding 13,000 in April.
Joel Naroff, chief economist for Naroff Economic Advisors, Holland, Pa., says its another economic report that is less bad.
In a vacuum, this would be categorized as a truly ugly report, but its not, Naroff said. First of all, the rate of job losses was significantly less than we had been seeing for the past six months. It is also the fourth consecutive month that the losses have moderated and the declines in March and April turned out to be less than originally estimated. Since we have to stop falling before we start rising again, the jobs numbers are pointing to the end of the major declines in payrolls.
Naroff said he isnt that surprised by the report since he said firms reacted very quickly last fall to cut their job rolls. Most of the major cutting, he argues, has already been done. That said, be also believes the 9.4 percent unemployment rate is likely to go higher before it starts to fall.
Double-digits are in sight and how high the rate will go is still unclear. Unemployment claims are still at levels that argue for more large increases in the months to come. Since this is a lagging indicator, we are going to have to deal with the rising rate and look past it, he said.
