Sudden Halt to Job Creation in the U.S.
Published in Le Figaro
(France) on 3 June 2011
by Guillaume Guichard (link to original)
(France) on 3 June 2011
by Guillaume Guichard (link to original)
Translated from
by Hannah Keet.
Edited by Heidi Kaufmann.
Only 54,000 net jobs were created in May, according to figures from the Department of Labor, which is three times less than the forecasts by economists.
After two months of strong job creation, the U.S. labor market suffered a severe and sudden halt. The U.S. economy created only 54,000 jobs in May, according to statistics released on Friday by the Department of Labor. Economists were expecting 150,000 new jobs to be created. The figures for March and April have both been revised downward to 194,000 and 232,000 respectively.
The private sector created only 83,000 jobs in May, in comparison to 251,000 in April, thus failing to offset the job losses that are continuing in the public sector (-29,000). The industry is responsible for the loss of 5,000 jobs over the month, including 3,000 in the automotive sector alone. According to economist David Resler from Nomura Bank, this is because of “supply disruptions" after the disaster in Japan. The food industry is also responsible for the loss of jobs. According to the analyst, this is one way of offsetting the rise in agricultural raw materials while reducing labor costs.
Inadequacy of Services
Above all, the trade sector has had a negative effect on the trend. In fact, after creating 64,000 jobs in April, the retail sector was responsible for the loss of 8,500 jobs in May. As for tourism and hospitality, they were responsible for the loss of 6,000 jobs after creating 32,000 the month before.
Only business services remained strong, with 44,000 positions created. The health sector also continued to hire (17,000), as well as the mining sector (7,000). "The rapid deceleration in job creation in services is worrying, as this sector has been the main source of jobs in recent months," notes Thomas Julien of Natixis, a French corporate and investment bank.
As for the unemployment rate, which is calculated on a different basis from job creation, it was raised from 9 percent to 9.1 percent in May. The long-term unemployed — i.e. unemployed for more than 27 weeks — have seen their numbers rocket by 361,000 over the month. In one year, the number of disheartened unemployed people, who have not looked for work in four weeks, fell by 261,000 to 822,000 people.
In response to these statistics, the euro first of all rose against the dollar, to more than $1.45. Then it fell to its lowest point of the session because the market has suffered a new aversion to risk, which was beneficial for the dollar.
Bad Month of May
Will the poor job figures herald a renewed weakness in the U.S. economy? In the short term, Brian Jones, an economist at Société Générale, foresees that "the evident deterioration of the situation revealed this Friday will be seen in future statistics concerning the month of May, for example on retail sales, which are expected to be low."
However, these coming months could bring about an upturn, according to Julien: "Most of the slowdown is attributable to temporary factors. Job creation should therefore be on the rise again during the second half of the year." Nomura is thus banking on the creation of 200,000 jobs in June or July.
However, not all analysts are this optimistic. "The poor employment figures, coupled with the hard fall of the ISM survey released this afternoon, and the setback of the Consumer Confidence Survey by the Conference Board ... the week was filled with bad news from the U.S.," say economists at Crédit Agricole. "The question is not so much about the slowing of the U.S. economy, which has already been proven, but its magnitude and duration."
After two months of strong job creation, the U.S. labor market suffered a severe and sudden halt. The U.S. economy created only 54,000 jobs in May, according to statistics released on Friday by the Department of Labor. Economists were expecting 150,000 new jobs to be created. The figures for March and April have both been revised downward to 194,000 and 232,000 respectively.
The private sector created only 83,000 jobs in May, in comparison to 251,000 in April, thus failing to offset the job losses that are continuing in the public sector (-29,000). The industry is responsible for the loss of 5,000 jobs over the month, including 3,000 in the automotive sector alone. According to economist David Resler from Nomura Bank, this is because of “supply disruptions" after the disaster in Japan. The food industry is also responsible for the loss of jobs. According to the analyst, this is one way of offsetting the rise in agricultural raw materials while reducing labor costs.
Inadequacy of Services
Above all, the trade sector has had a negative effect on the trend. In fact, after creating 64,000 jobs in April, the retail sector was responsible for the loss of 8,500 jobs in May. As for tourism and hospitality, they were responsible for the loss of 6,000 jobs after creating 32,000 the month before.
Only business services remained strong, with 44,000 positions created. The health sector also continued to hire (17,000), as well as the mining sector (7,000). "The rapid deceleration in job creation in services is worrying, as this sector has been the main source of jobs in recent months," notes Thomas Julien of Natixis, a French corporate and investment bank.
As for the unemployment rate, which is calculated on a different basis from job creation, it was raised from 9 percent to 9.1 percent in May. The long-term unemployed — i.e. unemployed for more than 27 weeks — have seen their numbers rocket by 361,000 over the month. In one year, the number of disheartened unemployed people, who have not looked for work in four weeks, fell by 261,000 to 822,000 people.
In response to these statistics, the euro first of all rose against the dollar, to more than $1.45. Then it fell to its lowest point of the session because the market has suffered a new aversion to risk, which was beneficial for the dollar.
Bad Month of May
Will the poor job figures herald a renewed weakness in the U.S. economy? In the short term, Brian Jones, an economist at Société Générale, foresees that "the evident deterioration of the situation revealed this Friday will be seen in future statistics concerning the month of May, for example on retail sales, which are expected to be low."
However, these coming months could bring about an upturn, according to Julien: "Most of the slowdown is attributable to temporary factors. Job creation should therefore be on the rise again during the second half of the year." Nomura is thus banking on the creation of 200,000 jobs in June or July.
However, not all analysts are this optimistic. "The poor employment figures, coupled with the hard fall of the ISM survey released this afternoon, and the setback of the Consumer Confidence Survey by the Conference Board ... the week was filled with bad news from the U.S.," say economists at Crédit Agricole. "The question is not so much about the slowing of the U.S. economy, which has already been proven, but its magnitude and duration."