Fuel, quake hit US economy
Post Date: 08 Jun 2011 Viewed: 484
UNITED States employment rose far less than expected in May to record its weakest reading since September, while the jobless rate rose to 9.1 percent as high energy prices and the effects of Japan's earthquake bogged down the economy.
Nonfarm payrolls increased 54,000 last month, the US Labor Department said yesterday, with private employment rising 83,000, the least amount since June. Government payrolls dropped 29,000. The government revised employment figures for March and April to show 39,000 fewer jobs created than previously estimated.
The job creation slowdown confirmed the economic weakness already flagged by other data from consumer spending to manufacturing.
It could stoke fears about the depth and duration of a slowdown that started early in the year.
The Labor Department said severe weather last month, including tornadoes and flooding, in the Midwest and the South did not materially affect data collection.
It also said that while some workers in those regions may have been temporarily displaced from their jobs, it found "no clear impact of the disasters on the national employment and unemployment data for May."
Economists still believe the lull in activity will be temporary. They cite high gasoline prices, bad weather and disruptions to motor vehicle production because of a shortage of parts from Japan as factors weighing on growth.
"It is clear we have temporarily entered a soft patch," said Christopher Probyn, chief economist at State Street Global Advisors in Boston.
"Nobody knows how soft and how long, but the best case view is that the fundamentals of the recovery remain intact and the economy will re-accelerate in the second half of the year."
While the recent string of weak data has sparked talk about the need for the Federal Reserve to extend its asset purchasing program when it expires this month, analysts believe policy makers will take a soft payrolls report in stride.
Officials at the US central bank regard the current downshift in the economy as temporary.
The Fed has been mapping out a strategy on how to start removing some of the massive stimulus it has lent the economy, and officials have made clear the bar for a further easing in monetary policy is high.