431,000 New Jobs: Thanks, Census!

Nonfarm Payrolls Add 431,000 jobs in May, while the nation's unemployment rate edges lower to 9.7%.
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) -- In a step back for the nation's labor market, the government said Friday that managers appeared to boost hiring at a hefty pace in May, but private sector hiring remained sluggish as most of the pickup came due to temporary census workers.

Nonfarm payrolls jumped by a seasonally adjusted 431,000 in May, according to the Labor Department's highly anticipated monthly jobs report, while the nation's unemployment rate edged lower to 9.7%. While it was the biggest nonfarm payroll gain since the spring of 2000, economists had predicted that employers would add 500,000 jobs to nonfarm payrolls last month, according to consensus projections provided by


. The nation's unemployment rate was expected to tick down to 9.8% from 9.9%, as well.

April's gain of 290,000 jobs to nonfarm payrolls remained unchanged, though March's jump, originally reported at 230,000, was revised lower to reflect a payroll increase of 208,000.

More disappointingly, the bulk of the May hiring came from a sharp uptick in temporary government workers. Overall, government hiring rose by 390,000. But the report was highlighted by a gain of 411,000 census workers. Census jobs are heavily discounted in market observers' minds due to their short life spans and non-organic growth qualities.

Meanwhile, the government said private-sector employers added a mild 41,000 jobs, which was well below expectations. The modest gain in non-government jobs also appeared to track closer to an earlier assessment from consulting firm

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, which estimated private employers added 55,000 jobs last month.

"Now, one piece of data is not going to tell the entire picture. But by every account, this is terrible news," said Craig Thomas, senior economist at PNC Financial. "Something took the wind out of the service-producing segment."

Thomas said confidence among hiring managers may have waned during the month, as negative headlines from the eurozone and the


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oil spill weighed on general market sentiment.

"If you see these events, they may be saying what's the harm in waiting to hire those extra 20 more people," he continued. "But if you look at orders, production, broad retail activity, earnings, trade, those indicators that reflect the foundation upon which the economy is built and where jobs come from are still in place and look very good. So this may be a one-off event."

In a bit of good news, manufacturing payrolls increased by 29,000 jobs last month, following other signals' strength in that sector's labor market. Earlier this week, the

Institute for Supply Management said an index reading manufacturing employment tracked higher, reading 59.8 in May from 58.5 in April.

Temporary help services also gained 31,000 jobs.

But the construction sector lagged, falling by 35,000 during the month. Retailer and financial hiring also staggered during the month, as payrolls fell by 6,600 jobs and 12,000 jobs, respectively.

While the unemployment rate came down last month, that was mostly the result of more people exiting the work force. After including part-timers looking for full-time work as well as those who gave up searching for positions all together, a separate rate measure of unemployment fell to 16.6% in May from 17.1% the month before.

The average workweek edged higher by a tenth of an hour to 34.2 hours, while average hourly earnings ticked up by 0.3%, or 7 cents, to $22.57.

And in yet another sign of the sluggish labor force elsewhere, both


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said this week they are making plans to lay off employees.

-- Written by Sung Moss in New York