Unemployment Rate Likely to Show Burst of Temporary Census Hiring
Most of the jobs expected to have been generated in May were for census workers hired on a temporary basis by the federal government. Such hiring is expected to have peaked in May and then begin tailing off in June.
By contrast, hiring by private employers -- the backbone of the economy -- may have slowed down a bit in May.
All told, the Labor Department's new employment snapshot released Friday morning is likely to be seen as further evidence that the job market is healing. Yet it's still years away from normal health and from recouping the millions of jobs wiped out by the recent recession.
Employers eliminated 7.8 million jobs from the start of the recession in December 2007 through April. To fill that hole and keep up with a growing work force, the economy would need to create a net 14.3 million jobs, said Mark Zandi, chief economist at Moody's Analytics. He doesn't see that happening until early 2015.
"The gap is likely to close only gradually," said Dennis Lockhart, president of the Federal Reserve Bank of Atlanta.
The United States probably added a net total of 513,000 jobs last month, economists predict. That would be an improvement from the 290,000 jobs added in April, the most in four years. And May's figure would mark the biggest monthly gain in payrolls since more than 1 million jobs were generated in September 1983, when the country was recovering from a severe recession.
But a huge chunk of May's net job gains -- perhaps 300,000 to 400,000 -- could come from the government's hiring of temporary census workers.
Census hiring typically peaks in May. That ensures the government has enough door-knockers to pursue people who didn't mail back their census forms. Higher productivity among census workers and a high mail-in response rate, though, could reduce the number of census workers needed. If so, the job total would come in lower than expected.
Jobs created by private companies in May could amount to around a net 175,000. That would mark a slowing from the 231,000 private jobs produced in April.
The unemployment rate is expected to drop a notch to 9.8 percent, from 9.9 percent, helped by the hiring of census and other workers. Still, economists think the rate will move higher this summer as census hiring fizzles and more people enter the work force looking for jobs.
The unemployment rate in October hit 10.1 percent, a 26-year high. Some analysts think it could go a bit higher and peak at 10.2 or 10.4 percent by June. That's lower than some forecasts earlier this year of 11 percent.
About 125,000 new jobs are needed each month just to keep up with population growth and prevent the unemployment rate from rising.
The prospect of persistently high unemployment is likely to prevent consumers from going on the kinds of shopping sprees they typically do during early phases of recoveries. That's a key reason why this recovery isn't as energetic as those usually seen in the past.
Hiring isn't expected to be consistently strong enough to quickly drive down the unemployment rate this year. Economists think the rate will remain above 9 percent by the November midterm elections. That could make Democratic and Republican incumbents in Congress vulnerable.
Only 20 percent of Americans consider the economy in good condition, according to an Associated Press-GfK Poll conducted in mid-May.
Despite the slow healing process, the job market is in a much better state than it was last year. Employers were still slashing payrolls then -- 387,000 jobs were cut just in May last year. So far this year, the economy has created a net 559,000 jobs.
"Businesses are more confident that they have the financial resources to invest and hire," Zandi said. "It isn't a straight line of improvement, but the job market is headed in the right direction."
Chrysler LLC said and Ford Motor Co. last month announced plans to hire as auto sales have risen. But others are still laying off workers. Hewlett-Packard Co. said this week it is cutting 9,000 jobs in its technology services division. And chocolate-maker Hershey Co. may cut 600 jobs.