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In jobs report, mostly something to cheer
Economy » Employers added positions at consistent rate, but robust signs missing.


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Some signs in the report suggested that the government spending cuts, which began taking effect in March, and weak growth in much of the rest of the world are weighing on the U.S. job market. Weakness overseas has slowed demand for U.S. exports.

Manufacturers cut 8,000 jobs. The federal government, which is carrying out deep spending cuts in domestic and defense programs, shed 14,000. Both were the third straight month of cuts for those industries. Over the past three months, the federal government has cut 45,000 jobs.

At a glance

May another solid month for women in job market

Unemployment for adult women, those 20 and older, fell for the third time in four months, to 6.5 percent. Here are some details from the government’s report:

Percentage jobless May 2013 April 2013 May 2012

White: 6.7      6.7        7.4

Black:         13.5        13.2        13.6

Hispanic:           9.1          9.0        11.0

Asian.:           4.3          5.1          5.2

                                                       

Adult men:           7.2          7.1          7.7

Adult women:           6.5          6.7          7.3

Teenagers:         24.5        24.1      24.4

20-24 years old:         13.2        13.1          13.0

25-54 years old:           6.4          6.4          7.1

55 and over:           5.3          5.5        6.5

Source: Labor Department

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The number of temporary jobs rose about 26,000. The economy has now added temporary jobs for eight straight months. That suggests that employers are responding to more demand but aren’t confident enough to hire permanent workers.

Industries that rely directly on consumer spending hired at a healthy pace — a sign of confidence that consumers will keep spending. Retailers added 28,000 jobs. Restaurants and hotels added 33,000.

These categories include many lower-paying occupations. By contrast, the recession sharply cut jobs in higher-paying industries such as manufacturing, construction and finance, which have yet to recover.

Mark Vitner, an economist at Wells Fargo, calculated that about 60 percent of the jobs created in May were in lower-paying fields. Even in a professional field such as health care, Vitner noted that one of the biggest job creators was home health care services, where care providers earn about $10 an hour, according to government data.

"It’s hard to get meaningful income growth with these types of jobs," Vitner said.

Rob McGahen, 29, has felt the trend personally. After receiving his master’s in business administration in 2007, McGahen worked for Boeing in St. Louis, buying parts for military planes.

Last year, after moving with his wife to Pensacola, Fla., McGahen sought work for about nine months. He settled for a part-time job in the produce section of Publix, a supermarket chain.

"It’s certainly not a long-term plan," McGahen said. "But it keeps me busy. It keeps my skills from atrophying."


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Stock markets have gyrated in the past two weeks on speculation that the Fed would soon start to taper its $85 billion-a-month in bond buying — a step that could raise rates and cause stock prices to fall.

"I think the Fed will stay on hold," said Nariman Behravesh, chief economist at IHS Global Insight. "They want to see numbers above 200,000 on payroll jobs on a consistent basis before they start to taper off."

Behravesh said he thinks the Fed will maintain its pace of bond buying through this year before scaling it back in 2014.

"Today’s report is perhaps the perfect number for nervous investors," said James Marple, Senior Economist at TD Economics. "It is strong enough to point to continued economic recovery but not so strong as to bring forward expectations of Fed tapering."

Other analysts who have predicted that the Fed would start trimming its bond purchases later this year said they didn’t think Friday’s jobs report would change that timetable.

John Canally, an economist at LPL Financial, blames the Federal Reserve for not specifying how much monthly job growth it wants to see before it scales back its bond buying.

"They have not been transparent enough," Canally said. "That is what has unhinged markets."

The Fed has been buying bonds to keep loan rates near record lows to encourage consumers and companies to buy and spend.

Low rates make investments that pay interest unattractive. As result, many investors have bought stocks instead. Money pouring into stocks drove the Dow to a record high last month. Stocks have since slipped from their peaks but are still up more than 20 percent since November.

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