May US job numbers expected to show struggles

Analysts were expecting that sharp cuts in local and federal government spending will translate into some grim numbers Friday when the Labor Department releases its figures on national employment for May. After two weeks of glum sectoral data, the figures on just how many Americans had jobs last month are expected to confirm a sharp slowdown in economic growth despite White House efforts to power up a job-creating recovery. That could add to the raging political battle over government spending and how to repair the economy while nine percent of the country remains unemployed, more than a year after the country's deep recession ended. So far this year the monthly figures on the number of employed Americans have risen steadily, but hardly fast enough to significantly push down the overall jobless rate. After about 1.1 million jobs were added last year, in the first four months of 2011 some 768,000 new positions have been created. But a combination of weak reports on corporate hiring and high figures for new layoffs since April suggest that the economy has lost momentum. Analysts agree that the May numbers would show a sharp downturn in the monthly increase in employment, after 221,000 jobs were created in March and 244,000 in April. The consensus forecast is that the unemployment rate will remain stuck at 9.0 percent with a modest 169,000 jobs created. But estimates were far apart: Barclays Capital predicted a still-buoyant 190,000; Natixis said 130,000; and High Frequency Economics foresaw a dismal 50,000, "thanks to the continuing loss of state and local government jobs." "The only question for (Friday's) official May employment report is just how much weaker it will be than April's," said High Frequency Economics' Ian Shepherson. The precursors to the government jobs data have been poor. Since early April, the weekly report on new US jobless claims has stuck stubbornly above the 400,000 line, after a tantalizing drop well below that threshold in the first quarter. On Thursday the number was at 422,000 for the week ending May 28. A day earlier payrolls firm ADP reported that the nonfarm private sector added a measly 38,000 jobs in May, well below the consensus estimate of 170,000. Other data of the past two weeks -- on the industrial, services, housing and construction sectors -- has all been weaker than economists had anticipated. The conclusion was that, after a limp 1.9 percent annual pace in the January to March quarter, the economy has not picked up a lot of speed as hoped. And so it is not creating jobs. Estimates are that the economy has to generate at least 200,000 new jobs per month consistently to be able to -- slowly -- eat away at the sky-high jobless rate. The private sector is adding positions, clearly, but deficit-ridden government budgets are forcing cuts at the federal, state and local level -- both laying off public workers and hurting private contractors to the governments. President Barack Obama's administration has insisted that governments at all levels need to keep spending to get the economy going, in the absence of strong investment by the private sector. But his Republican opponents are arguing that deficit spending has not produced the needed results, and threatens to push the country over a fiscal ledge. Eighteen months before the next presidential election, the issue is shaping up as central; polls show jobs and the economy are the foremost issues on the minds of voters right now. On Thursday, Republican Mitt Romney launched his effort to unseat Obama in the November 2012 election, saying Obama has failed to cut joblessness. "From my first day in office, my number one job will be to see that America once again is number one in job creation," he said. "Barack Obama has failed America."