Jobs data points to recovery losing momentum

Thu May 31, 2012 7:13pm EDT
 
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By Lucia Mutikani

WASHINGTON (Reuters) - Private payroll growth picked up only slightly in May and claims for jobless benefits rose last week, suggesting the U.S. labor market recovery was losing steam after a strong performance early in the year.

Other data on Thursday showed factory activity in the Midwest slowed considerably in May and economic growth in the first quarter was a bit softer than initially estimated.

Economists said the reports reflected business anxiety amid an uncertain global economic outlook as the euro zone's debt crisis escalates and China's economy slows.

"The economy is growing at an anemic pace and the job market is showing some signs of hesitation in the pace of hiring. There is a lot to worry about," said Paul Edelstein, an economist at IHS Global Insight in Lexington, Massachusetts.

Private employers created 133,000 jobs in May, payrolls processor ADP said. That was only a slight step up from April's tepid increase of 113,000 and below economists' expectations for a gain of 148,000.

The report comes ahead of the government's closely watched employment report for May on Friday, which is expected to show nonfarm payrolls increased 150,000, up from a paltry 115,000 in April.

The recent cooling in the labor market has been largely viewed as payback for strong gains during the winter, when unusually warm weather spurred economic activity. But economists are starting to worry that the troubles in Europe and an uncertain fiscal outlook at home are now dampening the U.S. recovery.

Initial claims for state jobless benefits rose 10,000 last week to a seasonally adjusted 383,000, a Labor Department report showed. Claims have now risen in seven of the last eight weeks.   Continued...

 
Job seekers speak with with job recruiters while they attend the Coast to Coast job fair in New York, May 7, 2012. REUTERS/Eduardo Munoz