According to the May monthly employment report, 431,000 jobs were created last month. Unfortunately, almost all of these jobs were temporary Census positions. Private sector hiring was dead in the water.
The Bureau of Labor Statistics (BLS) further stated that the unemployment rate in May fell to 9.7% from 9.9% in April. The massive addition of Census jobs, which only last a short time, was behind much of the drop. The BLS also claimed that 286,000 people left the labor force. Those people are not counted as unemployed. The May unemployment rate that includes workers still in the labor force, but who didn't look for a job in the previous four weeks, and those who are forced to work part-time because no full time job is available was 16.6% (seasonally adjusted). Long-term unemployed reached 6.8 million in May and this group of the unemployed accounted for 46% of the total - worse than any previous post War recession.
The jobs reports for March and April were heralded as evidence that the U.S. economy was recovering. The May report indicates that judgment seems to have been premature. As an example, Construction lost 35,000 jobs in May and this reversed much of the gains reported in the prior two months. Mining (NYSEArca: GDX) and Heath Care (NYSEArca: XLV) were the two big gainers in May, adding 10,000 and 8,000 jobs respectively. Health Care has been the only sector to continually add jobs since the recession began in December 2007.
The job gains reported by the BLS during the last year have been disproportionately accounted for by Census hiring. The BLS has of course not admitted this since it would undermine the U.S. government's claim of a recovering economy. In March, I reported how the BLS seemed to be placing Census jobs in the Business and Professional Service category. Within the last week, John Crudele of the New York Post has written a series of articles documenting how the Census has hired and fired workers up to four times and by doing so managed to create a 'new' job each time. The Financial Times in London estimated the U.S. was hiring 1.2 million Census workers for the 2010 count, whereas only 600,000 were needed in 2000. The Census has not only been used as a covert government jobs program, but hiring and firing since the second half of 2009 has been done is such a way as to inflate the total Non-Farm Payroll numbers. Moreover, Census supervisor jobs seem to have been listed in such a way as to make it look like businesses and not government was doing the hiring.
The May employment report indicates that there is little hiring activity going on in the private sector. This is the case even though the federal government has spent trillions on bailouts and economic recovery measures during the last two years. This money has essentially kept the U.S. economy from collapse, but it has not created the promised growth. How much longer can this game go on? It will be interesting to see what happens to the job numbers in the next few months when more than a million Census jobs disappear.
Disclosure: No positions
Daryl Montgomery
Organizer, New York Investing meetup
http://investing.meetup.com/21
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