Businesses dramatically scaled back hiring in May, pushing the nation’s unemployment rate up to 8.2 percent and stoking fears that the economic recovery has stalled once again.
The Labor Department reported Friday that the country added a meager 69,000 jobs last month — less than half the number economists had expected. It also revised its estimate of job growth in April down from 115,000 to just 77,000.
Additional Photos
Most of last month’s increase was driven by the service industry, while manufacturing and construction employment declined.
Markets dropped sharply at the news. The Dow Jones industrial average, Standard & Poor’s 500 and Nasdaq indexes all slid more than 2 percent, with the Dow falling nearly 275 points by closing bell.
“It’s just headed the wrong direction,” said Keith Hall, a senior research fellow at George Mason University and former commissioner of the Bureau of Labor Statistics. “There just simply isn’t enough growth in the economy to support job growth at a higher level.”
The disappointing results quickly became a political flash point, with Republicans seizing on the data as fresh evidence of what they called President Barack Obama’s mishandling of the recovery.
“Jobs are job one for the presidency,” Republican presidential candidate Mitt Romney said in an interview with CNBC. “The president’s trade, energy and health-care policies have held back growth and are scaring employers from hiring. All of them have made it less likely for businesses small and large to want to hire people.”
Earlier, House Speaker John Boehner, R-Ohio, criticized the administration’s stimulus programs as spending binges and called on Obama to approve the controversial Keystone XL pipeline as a way to add jobs.
Obama acknowledged the weak report in a speech at a Honeywell manufacturing facility in Golden Valley, Minn.
“Today we’re still fighting our way back,” Obama said before announcing a plan to help veterans earn certifications for high-tech manufacturing jobs, part of a broader White House initiative known as the Veterans Jobs Program. “We knew the road to recovery would not be easy. We knew it would take time.”
Referring to Europe’s heightening debt crisis and volatile oil prices, Obama said, “Our economy is still facing some serious head winds,” including high gas prices and the crisis in Europe. He said the problems in Europe’s economy are “starting to cast a shadow on our own, as well.”
“We will come back stronger,” Obama said. “We do have better days ahead.”
Economists had hoped that lackluster job numbers in recent months were merely the consequence of a statistical fluke caused by unseasonably warm weather that sparked hiring gains earlier than usual. But Friday’s data suggested something more like deja vu: Job growth is the weakest since May of last year, when the economy fell into a slump that lasted through the summer.
Analysts say the country needs to add roughly 130,000 jobs per month for the recovery to maintain its momentum. But to truly make a dent in the unemployment rate, hiring must reach a sustained rate of 250,000 jobs per month. The country has hit that mark only three times over the past year and a half.
In May, the health-care and transportation sectors each hired more than 30,000 people, the most of any industry. But those gains were offset by a sharp drop in construction jobs. Economists also said that a small increase in the number of people who are now looking for work also helped drive up the unemployment rate.
“Very few companies are willing to take money and invest in the future now,” said Carl Camden, chief executive of Kelly Services, a global staffing firm.
There were small rays of optimism, however. The government also reported that consumer spending rose by 0.3 percent last month and that incomes increased 0.2 percent. Automakers announced strong May sales, with Chrysler up 30 percent in the United States.
But the gloomy jobs data overshadowed the bright spots.
The uncertainty over the global economy has constrained domestic growth, said Bernard Baumohl, chief global economist for the Economic Outlook Group.
Send questions/comments to the editors.
Success. Please wait for the page to reload. If the page does not reload within 5 seconds, please refresh the page.
Enter your email and password to access comments.
Hi, to comment on stories you must . This profile is in addition to your subscription and website login.
Already have a commenting profile? .
Invalid username/password.
Please check your email to confirm and complete your registration.
Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.
Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.