While “it’s hard not to like a lot of jobs,” as economist Dean Baker told CNN, other contents of the May jobs report add to the pile of unwelcome economic news that has included slower GDP growth, a pullback in some spending and a rise in credit card delinquencies.
“The good news is we saw the explosion in payrolls. The bad news is the rise in unemployment with an acceleration in wage gains,” Diane Swonk, chief economist with KPMG, told CNN.
Unemployment rose
The unemployment rate rose to 4% from 3.9%. It’s the first time in more than two years that the jobless rate is not below 4%.
The rise in unemployment can be traced to the findings of the household survey (one of two surveys that feed into the monthly jobs report). Compared to the establishment survey that showed the robust 272,000 net gain in jobs, the household survey faltered.
Employment as measured by household survey responses fell by 408,000 in May from April; the number of people in the labor force fell by 250,000; the labor force participation rate inched down to 62.5% from 62.7%, Gus Faucher, PNC chief economist, noted Friday.
“Jobs declined in the household survey, but that number is more volatile than the employer survey,” he wrote.
And while unemployment rose only slightly, by 0.1 percentage points, it landed at a number that could have a psychological component.
“4% is thought of as a magical number — a number below which participation rises, below which we tend to see employment rates increase faster for women and for minorities,” Julia Pollak, chief economist of ZipRecruiter, told CNN earlier this week.
“Employers in a tight labor market, they have to do extraordinary things; they have to cast a wider net; they have to actively recruit non-traditional candidates; they have to offer more attractive job conditions, more flexibility, think about installing air conditioning in their trucks or offering a bus to employees. So, it is kind of a magical number,” Pollak said.