The Labor Department reported on Friday that the nation added 54,000 nonfarm payroll jobs last month, after an increase of about 220,000 jobs in each of the three previous months. The gain in May was about a third of what economists had been forecasting. The unemployment rate, meanwhile, edged up to 9.1 percent from 9.0 percent in April.
“The economy clearly just hit a brick wall,” said Paul Ashworth, chief United States economist at Capital Economics. “It’s almost as if it came to a complete standstill.”
While most analysts do not believe that the country will slide back into a recession — which would technically mean that the economy would start shrinking again — they acknowledge that with such low levels of hiring, the recovery is barely perceptible to many Americans.
In Washington, today’s hiring challenges have been receiving less attention than tomorrow’s fiscal ones. But a week of dismal news on manufacturing, housing and car sales may shift the discussion. Some pressure is building on the Obama administration and Congress to delay federal spending cuts, which economists say will weigh down the fragile recovery. Liberal groups have renewed their calls for more aid to the states and more aggressive action from the Federal Reserve.
In some ways the moment is reminiscent of a year ago, when the economy also slowed abruptly just as it seemed to be gaining momentum. At the time, the slowdown was attributed to worries over the European debt crisis, just as Friday’s report was partly attributed to temporary stresses from higher energy prices and natural disasters. Last year’s downshift was followed by additional federal spending and another round of asset purchases by the Federal Reserve.
In remarks to Chrysler workers in Toledo, Ohio, President Obama conceded that the economy was still weak, and that policy makers had more work to do.
“Even though the economy is growing, even though it’s created more than two million jobs over the past 15 months, we still face some tough times,” he said. “You know, it’s just like if you had a bad illness, if you got hit by a truck, it’s going to take a while for you to mend. And that’s what’s happened to our economy. It’s taking a while to mend.”
Republicans, meanwhile, countered that Democratic efforts to revive growth through public spending programs have failed and renewed their calls for sharp cuts in federal spending and regulation to spur corporate investment.
Though the White House cautioned against putting too much weight on one report, Friday’s release showed disturbing trends across the economy.
Job growth for April and March was revised downward. State and local governments, struggling with severe budget shortfalls, continued to shed jobs in May. They are expected to keep laying off workers for months to come.
Private companies added jobs, but the pace of hiring fell to its lowest level in a year. The biggest gains were in professional and business services and in health care services, which grew steadily even during the recession.
One particularly unsettling note was the lack of a pickup in temporary help services. Temp hiring is considered a bellwether for broader hiring, since employers often try out temporary employees when considering whether to take on additional permanent staff. Employment in temporary help services was essentially unchanged in May and April.
Another leading indicator — the length of the workweek — was also disappointing. Usually businesses have existing employees work longer hours before hiring more workers. But the average did not budge in May.
Manufacturers delivered another blow by ending a six-month streak of job gains. They instead eliminated 5,000 jobs in May.
“They were our bright spot for so many months,” said Heather Boushey, a senior economist at the Center for American Progress, a liberal research organization. “They were what was pulling the economy forward.”