Beating out the consensus figure of 163,000 by economists participating in the Bloomberg survey, U.S. companies added more workers to their payrolls in May. According to the Labor Department employment situation survey, employers create 175,000 new jobs. April’s original estimate of 175,000 was revised to 149,000. The increase in May shows that companies are, for the most part, riding out the tax hikes and federal spending cuts—so far.
The fact that businesses continue to maintain employment levels signals managements’ positive expectations about demand for the 2nd and 3rd quarters in 2013. This is especially encouraging after the two percent payroll tax increase that hit consumers starting January 1, which has undoubtedly affected consumer spending.
Data by worker category
The unemployment rate ticked up to 7.6 percent from 7.5 percent because more workers entered the labor force in May. Similar to April, the number of Americans unemployed stands at 11.8 million.
Here are the unemployment rates for major worker groups:
- Adult men – 7.2%
- Adult women – 6.5%
- Teenagers – 24.5%
- Whites – 6.7%
- Blacks – 13.5%
- Hispanics – 9.1%
- Asian – 4.3%
Other unemployment figures
The employment situation figures show that the number of persons who have been jobless for 27 weeks or more—called the “long-term unemployed”—remains unchanged at 4.4 million. This figure represents 37 percent of unemployed workers and a 1-million decrease in the long-term unemployed over the last 12 months.
The number of “underemployed,” people who involuntarily work part-time, remains stable at 7.9 million workers. The underemployed consists of people who hours have been reduced or they cannot find suitable full-time employment.
May’s job situation survey classifies 2.2 million individuals as “marginally attached” to the work force compared to 2.4 million year-over-year. This person did not participate in the work force, but were available to work. They also looked for employment”sometime in the prior 12 months,” but had not actively searched for employment in the four weeks prior to the survey.
Some 780,000 respondents said that they were “discouraged.” They stopped looking for work because they believe that jobs are not available. The other 1.4 million people in this group attribute factors like family responsibilities and school as reasons why they had not searched for work.
Fed continues to monitor labor market
Economist Omair Sharif, of RBS Securities in Stamford, Connecticut, accurately predicted the gain in new hires. “Things aren’t weakening in the labor market as much as we’d feared,” said Sharif. He also said that more workers have reentered the labor market or “coming in for the first time.” Sharif says that the difference lies in the “economy is able to absorb most of them.”
The positive employment situation report is not enough to affect the Federal Reserve intentions to hold the course on the monetary stimulus. Fed Chairman Ben Bernanke and other bankers plan keep the $85 billion a month asset buying program in place until the labor market improves and the unemployment rate drops to the target rate of 6.5 percent.