The U.S. economy created the fewest number of new jobs in a year last month while the unemployment rate grew slightly, indicating the economy could be struggling once again after a strong start to the year.
The Bureau of Labor Statistics reported on June 1 that nonfarm payroll increased by 69,000 jobs last month, much lower than what economists had predicted and the smallest gain since May 2011. The unemployment rate, which had been ticking down for months, grew from 8.1 percent to 8.2 percent, mostly due to an increase in workers in the labor force despite slower hiring, according to MarketWatch.
A MarketWatch survey found that economists had predicted 165,000 new jobs would be added, while the unemployment rate would remain stable at 8.1 percent.
"There’s no positive spin that can be put on the May Employment report," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors. "It was a disappointment, pure and simple."
The report led stocks to fall further, as the statistics raised concerns among investors who have already expressed worry over Europe's financial crisis.
"The weak job growth just confirms that businesses aren’t about to embark on any major hiring plans until the situation in Europe clears up," said Jennifer Lee, senior economist at BMO Capital Markets. "This report does not bode well for the second half of the year."
After a strong start to the year, permanent hiring has dropped off considerably. Between December and February, job growth averaged 252,000 a month, but by April, growth was brought down to 77,000 after an initial report of 115,000. March job growth was also cut back from 154,000 to 143,000.
However, professional and business services employment remained the same as the previous month. Since hitting a low in September 2009, employment in the industry has grown by 1.4 million. Temporary help services were up in May, rising by 9,200.
As the jobs climate remains in a state of recovery, companies will likely continue to work with temporary staffing firms, which give businesses the opportunity to take on new workers at low cost. The early 2012 job growth estimate, which called for an average of 150,00 to 200,000 new jobs per month, seems unlikely, indicating temporary help services will remain a strong aspect of the U.S. workforce.