U.S. unemployment rate unchanged at 8.2% in May
Posted Jun 1, 2012 09:30:59 AM.
This article is more than 5 years old.
The U.S. unemployment rate was unchanged at 8.2 per cent in May, with only 69,000 jobs created in the month.
Dow futures were down by 200 points in reaction to the jobs report, while the U.S. 10-year bond yield fell below 1.5 per cent — the lowest on record, suggesting investors are flocking to the safety of U.S. government bonds.
The number of jobs created in May were the fewest in a year, boding ill for President Barack Obama’s re-election chances.
Republicans seeking the White House have accused Obama of failing to steer the economy out of a deep recession, setting up the health of the nation’s economy as a pivotal issue in the 2012 election.
The dismal jobs data will fan fears that the economy is sputtering. And it could lead the Federal Reserve to take further steps to help the economy.
The Labor Department also said Friday that the economy created far fewer jobs in the previous two months than first thought. It revised those figures down to show 49,000 fewer jobs created.
The price of gold, which was trading at about $1,550 an ounce before the report, shot up $30. For much of the past three years, investors have seen gold as a safe place to put their money during turbulent economic times.
Mitt Romney, Obama’s Republican challenger, has made the economy the central theme of his campaign. No president since the Great Depression has sought re-election with unemployment as high as 8.2 per cent, and past incumbents have lost when the unemployment rate was on the rise.
The economy is averaging just 73,000 jobs per month over the past two months — roughly a third of 226,000 jobs created per month in the January-March quarter.
There are signs business confidence is waning. Companies have cut their spending on computers and machinery for two straight months, goods that signal investment plans. And some regional surveys suggest the factory activity is expanding at a slower pace.
Consumers are also more downbeat about the economy, according to a May survey from the Conference Board. That could lead more Americans to cut back on spending, which drives 70 per cent of economic growth.
Construction firms cut 28,000 jobs, the steepest drop in two years. Professional services, government, hotels, restaurants and other leisure industries also lost jobs.
Not all industries cut jobs. Manufacturers added 12,000 jobs, while transportation and warehousing created nearly 36,000.
Businesses are facing a growing threat from Europe’s financial crisis, which has worsened in recent weeks. The crisis is driving up borrowing costs for Spain and Italy and spreading to the banking system. Greece could be forced to exit the euro, which could push the region into a sharp recession. That could limit U.S. growth.
