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Job data reflect signs of global slowdown

The U.S. economy gained a net 69,000 jobs in May, the Labor Department said Friday, a dismal showing that reflected mounting evidence of a global slowdown. The unemployment rate rose to 8.2 percent from 8.1 percent in April, largely because more people began looking for work.

The payroll growth, which came in at less than half of what analysts had expected and was the lowest number of net jobs created in a year, was potentially devastating for President Barack Obama as he faces re-election. It also put increased pressure on the Federal Reserve to expand its stimulus campaign.

As the third disappointing performance by the job market in three months, it served for many as confirmation that the economic recovery has once again lost momentum.

The Dow Jones industrial average fell 275 points, its worst day of the year, and for the first time was down for 2012.

Mitt Romney, who on Tuesday cleared the number of convention delegates required to win the Republican presidential nomination, told CNBC that the report was "devastating."

He called for an emphasis on energy development, pledged to "kill" the health care overhaul and said he would reduce taxes and government spending. The clearest fix for the economy, he said, was to defeat Obama.

Obama, in Minnesota, pushed a proposal to expand job opportunities for veterans returning from Iraq and Afghanistan. He said the economy is not creating jobs "as fast as we want" but vowed that it would improve.

"We will come back stronger," he said. "We do have better days ahead."

The Labor Department also revised downward April's gain in jobs, estimated last month at 115,000, to an increase of 77,000.

"In February or March, I thought the labor market had achieved escape velocity," said Patrick J. O'Keefe, the director of economic research at J.H. Cohn, a consulting firm. "It appears to me now that that was a premature call."

Several members of the Federal Reserve's policymaking committee have said in recent days that they are not inclined to change current policy, but that position has always been contingent on continued growth.

The report released Friday follows a host of worrying economic data. Consumer confidence, as measured by one of two major indexes, has fallen, and factory surveys indicated that new orders had slowed significantly.

On the other hand, there have been bright spots, such as the auto industry, where sales have been booming. Another measure of the labor market, the employment-population ratio, which takes into account all working-age people whether or not they are looking for jobs, ticked up.

Ellen Zentner, the senior U.S. economist for Nomura, the financial services firm, blamed the poor showing on increased anxiety about Europe's troubles, not to mention waning growth in China and, to a lesser extent, India.

"Manufacturers are very concerned about Europe because a blowup in Europe means a global slowdown," she said. "It hasn't translated into layoffs — businesses are just hiring less."

Information from the Associated Press was used in this report.

Coming Sunday in Perspective: A PolitiFact scorecard on Obama and the economy

Job data reflect signs of global slowdown 06/01/12 [Last modified: Friday, June 1, 2012 11:19pm]
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