NEW YORK (CNNMoney) – Don’t expect to see a jobs comeback on Friday.
The economy was expected to have added 150,000 jobs last month, according to economists surveyed by CNNMoney. They project that the job report for May will show the private sector expanded payrolls by 162,000 jobs, but government shed 12,000 positions.
The unemployment rate should hold steady at 8.1%.
All eyes are on Friday’s numbers, after April’s jobs report showed surprisingly weak growth of just 115,000 jobs, a significant slowdown from January and February, when 200,000+ jobs a month were created.
Some job watchers had felt the slowdown that began in March and worsened in April was mainly due to warm weather earlier in the year that could have given the job market a temporary artificial boost. But another poor showing in May might dash hopes that the weakness was only a temporary blip.
Job growth that exceeds 250,000 a month is a sign of a healthy economy, while expansion of 150,000 only keeps pace with population growth.
That relatively tepid employment expansion means job seekers — particularly the young, the old and the uneducated — must duke it out for the few available openings.
“When you are getting this drip, drip job creation, the competition is much, much harder,” said Bill Rodgers, public policy professor at Rutgers University, noting that there are still about four jobseekers for every open position.
Economists lay the blame for the slow growth at the feet of Europe and Washington D.C. The steady drumbeat of headlines concerning Europe’ financial woes, as well as the looming fiscal cliff in the U.S., is weighing on consumer confidence, said Sal Guatieri, senior economist at BMO Capital Markets. Adding to the problems is the slowdown in the Chinese economy.
“Businesses are worried about fiscal uncertainty,” he said.
Consumer confidence, meanwhile, fell to a five-month low, according to a survey released Tuesday by The Conference Board. Only 16.6% thought business conditions would improve the the next three months, while 15.8% felt hiring would pick up.
Employee confidence has also slipped for the past two months, said Joanie Ruge, chief employment analyst at Randstad, a temporary staffing firm. Their belief in their ability to find a new job has dropped.
“Employees are seeing that job creation isn’t happening fast enough,” she said.
But companies aren’t laying off people in droves, either. And downsizing in the public sector, which has shed hundreds of thousands of jobs, is finally leveling off.
If jobless claims offer any insight, May’s growth will be comparable to April’s. Jobless claims have been bouncing around 370,000 for four weeks, indicative of slow expansion.
Lackluster growth, however, may be the new normal, said Patrick O’Keefe, director of economic research for J.H. Kohn, an accounting firm. The nation has a more limited ability to create jobs these days in part because of increased globalization and additional constraints on credit.
“We are improving, but we are improving at a more subdued rate than existed prior to the real estate and Wall Street meltdowns and the recession,” he said. “This is probably indicative of what we’ll experience in the foreseeable future.”
