Unemployment Upticks to 7.6% in May

The national unemployment rate grew to 7.6% in May, up from 7.5% in April. That increase translates to 101,000 additional unemployed persons.

Though the unemployment rate did increase, the crucial Labor Force Participation Rate saw a slight increase from 63.3% to 63.4%, reflecting a drop of 231,000 of those considered ‘not in the labor force.’ This means that people who had left the work force due to a lack of jobs, are now returning and looking for work.

However, those who did not finding work quickly are now counted as unemployed causing the unemployment rate to go up as well.

Paradoxically, this could be taken as good news, since it means that means that the long term unemployed (or some of them at any rate) feel strongly enough about their chances of finding a job, that they have started to look again.

Taking into account historical baselines, if all of those people not in the workforce, but would like a job were counted in the official unemployment rate, the rate would be 8.7%

Turning to the establishment data, the country added 175,000 non-farm payroll jobs in May. Sectors seeing the largest gains were Retail Trade (+27,000), Temporary Help Services (+25,600) and Healthcare (+11,400) and Food Services and Drinking Places (+38,100).

Growth in the Healthcare field is constant, especially with an aging population, so payroll jobs in that sector does not say much about the economy as a whole.

The growth in Food Services and Retail Trade, while large in real terms, is actually consistent with the growth seen over the past two years. Retail Trade in particular is still well short of pre-recession highs.

Temporary Help Services (i.e. temp jobs) have seen greater than average growth over the past year. There are at least two possible causes for this: employers have a need for more workers, yet are unsure about future growth so they are hesitant to bring on full time employees or they have concerns over the implementation of the Affordable Care Act.

Seeing the largest losses were Federal Government (-14,000), Hospitals (-5,900) and Manufacturing (-8,000).