Has the Unemployment Scene Bottomed?
The U.S. economy shed “only” 345,000 jobs in May, the Labor Department said this morning. We forecast Wednesday that today’s employment gauge would beat expectations, but wow… this number smashed the Street’s guess of 520,000. Last month’s loss is the smallest since it all hit the fan last September.
May’s number establishes a trend for 2009, too. The jobs scene is far from rosy, but at least it doesn’t seem to be getting worse…not yet anyway.
So “Buy, buy, buy!” as they say in Cramerica, right? U.S. index futures jumped on the news and the Dow and S&P 500 opened up 1%. And if you aren’t the type to be bothered by the fine print, we suggest you slam the buy button too.
But the details of today’s jobs report aren’t quite as rosy as the headline number. The unemployment rate rose to 9.4%, notably higher than the expected 9.2%. In other words, the unemployed are not being rehired. While the rate of firings cooled off, the bread line is just getting longer and longer. 9.4% is the highest rate since 1983.
And it’s funny how the dark science of charting works. The chart above would lead you to believe the jobs scene has bottomed…but does this one inspire the same confidence?
More disturbing details:
· Over 6 million people have lost their job since the recession officially began in December 2007
· The “long-term unemployed” – those out of work for six months or more – now exceed a record 4 million. Many of these “discouraged” people are not counted toward the official unemployment rate
· 9.1 million people are working part time because they can’t find a full-time gig – also not counted as officially unemployed.
We don’t mean to rain on this parade. 345,000 lost jobs is certainly better than the half a million firings that have sadly become a monthly routine. But it sure ain’t a good number. Try to maintain some sense of perspective… this time last year, we reported a “horrid” job loss of 49,000 for the month of May, a number nasty enough to push the Dow down over 3%. 345,000 firings back then would have had CNBC correspondents recreating Lord of the Flies.
So today, forgive us for not dancing in the streets.