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A Horrible Jobs Report

From the BLS:

Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today. Private-sector employment changed little (+41,000). Manufacturing, temporary help services, and mining added jobs, while construction employment declined. The unemployment rate edged down to 9.7 percent.

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This report stinks. The majority of job creation came from Census hiring — the private sector was non-existent.

Let’s look at the data:

The civilian labor force decreased by 322,000 and the number of unemployed decreased by 287,000. This lowered the unemployment rate to 9.7%.

The labor force participation rate decreased .2% because of a drop in the number in the civilian labor force. The employment to population ratio decreased .1%. This means that fewer people participated in the labor force last month and the percentage of people employed as a percentage of the civilian labor force decreased.

Total private jobs created were 41,000. Goods producing industries increased 4,000, with an increase in manufacturing and mining offset by a drop in construction. Service employment increased by 37,000. With the exception of financial services (which decreased 12,000), all sectors saw growth. Just not much growth.

Simply put, the private sector dropped out of the equation last month. Period. Unfortunately, this report comes at the worst time possible — when the markets are already shaky. In addition, the initial unemployment claims numbers — which have dropped the last two weeks — are still high. This is not a good combination.

Several weeks ago, I wrote an article titled Storm Clouds on the Economic Horizon. In that article I wrote the following:

[Going forward] the economy needs to keep up its current pace of job creation. Last month we had a great employment report. That needs to be repeated in the next report.

This is the worst possible jobs report we could have in the current environment. Now — this is just one report. The record indicates things are moving in the right direction; this could be nothing more than a speed bump. But, this is a most ill-timed speed bump.