US jobs report: highlights and lowlights

Does this sound familiar? US Jobs growth looks strong early in the year, only to peter out around May, leading to fears of a new recession.

It should. It describes what happened in 2010, 2011, and now again this year.

The US economy added 69,000 jobs in May, the Bureau of Labor Statistics reported last week. Though these reports are 'noisy' and prone to revisions, this was anything but good news. The Dow (INDEX: ^DJI) fell nearly 300 points in response.

The best way to get a feel for the US jobs situation is to focus on the trend. Averaging the most recent six months together, the trend in job creation doesn't look so bad, despite last month's disappointment:

Source: BLS.

Indeed, the current six-month average — 175,000 jobs a month — is nearly identical to growth seen in 2005 and 2006, when the US economy was booming. Today's figures look even better if you focus on the private sector. Government employment has contracted by an average of 14,000 jobs a month over the last year, compared with growth of 12,000 a month from 2000-2006. Recent private-sector employment growth has been some of the strongest in more than a decade.

But that positive spin masks a bitter reality: Employment fell so ferociously in 2008 and 2009 that even decent rates of growth today aren't enough to make a difference. If the economy continues to add an average of 175,000 jobs a month going forward, the unemployment rate would not fall below 6% until 2021. We will almost certainly endure more recessions between now and then, so the trajectory is likely even worse than that.

The US unemployment rate ticked up a tenth of a percent last month, to 8.2%. Most of the rise was due to an increase in the size of the labour force, which jumped by a whopping 642,000. That's actually a rare bit of good news — an indication that those once discouraged from even looking for a job are tiptoeing back in. Last week, the Reuters/University of Michigan Consumer Confidence report showed that "the fewest consumers reported hearing of job losses in May than any time since mid-2007." All the while, a broader unemployment rate that includes discouraged workers and those working part time involuntarily rose to 14.8%, from 14.5%. Any way it's sliced, too many people are staring down too few jobs.

A few other bits from recent employment reports:

Bad news: Most jobs created this year have been in temporary or low-pay work. Manufacturing and construction jobs have risen only modestly, while fields like temporary help and food services have done well.

Good news: Excluding temporary hiring for the 2010 census, this was the strongest May jobs report in five years, and the fourth best in the last decade (although that highlights how poor a decade it's been for employment).

Bad news: Average hourly earnings have increased just 1.7% in the last year, below the rate of inflation. The average number of hours worked has ticked down this year, and sits flat from a year ago at 34.4 hours per week.

Good news in context: As my colleague Matt Koppenheffer points out, the year-over-year change in total employment for the last three years shows decisive progress:

• 2009: -5.6 million.
• 2010: -945,000.
• 2011: +468,000.
• 2012: +2.5 million.

Bad news: March and April's initial job reports were revised down by a combined 49,000.

Statistically weird news: Women captured 138% of the jobs growth last month, as male employment fell.

Important news: The unemployment rate for those with a bachelor's degree is 3.9% — less than a percentage point higher than it was a decade ago. For those with a high school diploma, it's 8.1%, or 2.5 percentage points higher than a decade ago. For those without a high school diploma, the unemployment rate is 13%, or nearly 5 percentage points higher than a decade ago. The disparity between the college-educated and everyone else has never been so great.

The last two spring slowdowns eventually blew over, with employment and stocks bouncing back later in the year. Will the same trend repeat this time, or are we now in the midst of a lasting slowdown? No one knows. What we do know is that it's bad now, and unless things get considerably better very quickly, millions face the prospect of being stuck in a generation of joblessness. There's never a good time to panic, but that should make everyone nervous.