Stocks slide after poorer-than-expected monthly jobs report

A disappointing Labor report on Friday led to a sell-off on Wall Street and questions for Democrats ahead of November’s elections.

The report showed the economy added 431,000 jobs in May, the most in a decade. But nearly all of
the added workers were temporary job-holders hired by the Census, whose work will be completed in a matter of weeks.

Census 2010 added 411,000 temporary employees in May,
according to the Labor Department report.

The private sector added only 41,000 workers in May, less than a quarter of the total created by the private sector just a month ago. The nation’s unemployment rate dipped from 9.9 percent to 9.7 percent.

{mosads}The numbers clearly disappointed Wall Street. The Dow Jones Industrial Average fell more than 150 points shortly after the opening bell, and had lost 300 points by Thursday afternoon. That put the Dow Jones under the psychologically important 10,000-point marker.

Democrats, including President Barack Obama, emphasized the positive in the report, which
showed job growth for the fifth month in a row after nearly two years of monthly
job losses.

“The road to recovery is bumpy, but we’ve been trending in
the right direction,” Rep. Carolyn Maloney (D-N.Y.), chairwoman of the
Joint Economic Committee, said in an interview.

Maloney said Democrats must continue to push a message to
the public that the economy is improving from its lows in early 2009, when
monthly job losses totaled more than 700,000. The report from May 2010 is very
different from the report a year ago, Maloney said.

In May 2009, the economy lost 387,000 jobs, according to the Bureau of Labor Statistics.

“It’s important to look at the trends. We’re on an uphill
trend,” she said. “I think the public can see this.”

This year’s midterm elections are expected to hinge on the
economy, and the Obama administration and Democrats are counting on a rising job
market to help stem losses this fall.

Republican leaders said the May report shows the private
economy is not rebounding as strongly as promised. House GOP Leader John
Boehner (Ohio) noted that 95 percent of the job growth last month came from the
Census.

“Positive job growth in May is an encouraging sign, but it
is disappointing that nearly all of those gains are temporary, taxpayer-funded
government jobs through the U.S. Census,” Boehner said in a statement. “Stagnant
private sector job growth is clearly cause for concern and evidence of the
struggles small businesses continue to face. A jobless recovery is not
what the American people were promised.”

Throughout the day, Republicans blasted out statements and reports highlighting the job figures as disappointing.

Private analysts had predicted businesses could add as many as
150,000 jobs in May and had estimated that total hiring, including by the
Census, could total more than 500,000 jobs.

IHS Global Insight Chief Economist Nigel Gault
said the news wasn’t all gloomy. The workweek rose, as did hourly
earnings. Coupled with falling consumer prices, that means more
purchasing power for those with jobs, which could boost the economy and
create more jobs.

Gault also said those looking for trends in the economy should probably look at April’s numbers as being unusually rosey, and May’s unusually poor.

Gault also said he doesn’t think there will be a double-dip recession.

“We
do not yet have the makings of a double-dip, and we still believe that
private sector job creation will gradually improve over the rest of the
year,” he said in a research note. Companies will reach limits on hours
and productivity gains, and will need to rehire, he wrote.

Other parts of the federal government, along with state and
local governments, reduced their employment for the month. Hiring in May by
state government, excluding education, dropped by 13,000.

The hiring by the private sector paled in comparison to the
230,000 jobs added by businesses in April, and ends a run of two months of
strong job totals there. Including government workers, the economy had added 290,000
jobs in April.

Labor adjusted its estimate for March employment, reporting
that 208,000 jobs were added to the economy instead of the previously reported
230,000.

The economy needs to add around 100,000 jobs a month just to
keep up with population growth. Because of the long recession, it now must add
many more jobs than that every month to accommodate the 15 million unemployed
people returning to the workforce.

Manufacturing, temporary help services and mining added
jobs, while construction employment declined, according to the Labor report.

May is the biggest month for hiring by the Census and was
expected to give a boost to the monthly report. But hiring by the Census has
also peaked, and those collecting information will lose their temporary jobs in
the weeks ahead.

Census hiring is also expected to boost gross domestic
production growth in the second quarter by about a quarter of a percentage
point, according to a report issued earlier this year by the Commerce
Department.

This story was posted at 8:43 a.m. and updated at 10:39 a.m. and 3:58 p.m.