The job market continued its pattern of slow but steady growth in May, with employers adding 175,000 new jobs, the government reported Friday. The headline unemployment rate, meanwhile, inched upward from 7.5 percent to 7.6 percent, remaining "essentially unchanged," according to the Labor Department.
The payrolls figure comes in slightly better than consensus estimates, which were at 167,000, according to Bloomberg. It also represents a slight acceleration from April's 142,000, an upward revision of 4,000 from the previous estimate. Meanwhile, March's jobs figure was revised downward, from 165,000 to 149,000.
Professional and business services, a broad industry that features workers such as accountants and administrative workers, added the most jobs last month, with 57,000 new positions. Leisure and hospitality added 43,000 new jobs, retail added nearly 28,000, and education and healthcare added nearly 26,000 new workers. Meanwhile, manufacturing lost 8,000 workers, transportation and warehousing cut nearly 4,000 jobs, and the government cut 3,000 workers.
The jobs report, which shows moderate labor market improvements, fits in well with recent mixed economic data, which have featured boosts in consumer confidence alongside contractions in manufacturing activity. Given recent mixed economic data, the best word to describe employers right now is cautious, says Patrick O'Keefe, director of economic research at accounting and advisory firm CohnReznick.
"I think the term 'uncertainty' has been overdone," says O'Keefe, who notes that there is always uncertainty in the economy. "I think what's going on now is particularly with respect to employment, the employers are reacting to changes in demand. They're not anticipating potential future growth in demand."
That means that when employers do see growth, they are making choices other than adding full-time workers, such as having current workers work more hours and adding temporary and part-time employees, O'Keefe says.
The January expiration of the payroll tax cut, as well as tax hikes on the wealthiest Americans, are two key factors holding job growth down right now, despite the fact that they happened five months ago. Their effects are hanging on because the impacts of smaller paychecks are continuing to build, making for a cumulative effect for both modest-income and high-income homes, O'Keefe says.
In light of the weak recovery, the Federal Reserve has been taking extraordinary measures, such as its $85 billion monthly bond buys known as QE3, in the hopes of promoting full employment -- half of the central bank's "dual mandate," along with fostering price stability. Those bond buys have been boosting the stock market, meaning that while today's numbers may signal an unhappy labor force, it also may excite investors.
"It's not that investors want to see bad news. But if they see mixed news, that prolongs QE3," says Brett Wander, chief investment officer of fixed income at Schwab. "To some extent, that's about the best news possible."
That excitement over modest numbers is just one example of how the jobs report is an exercise in perspective. While 175,000 new jobs may be encouraging, the report abounds in mixed news. While the unemployment rate held relatively steady, that rate only counts the number of Americans who are unemployed and looking for work. CohnReznick's O'Keefe also says that for this reason, when he reads the jobs report, he first looks at the employment rate: the share of Americans with a job.
"That is a measure of resource utilization. It also is not prone to the same definitional challenges that we have, for example, with the unemployment rate," he says.
That rate held steady last month, at 58.6 percent -- exactly where it was in May 2012. That underlines what is perhaps the key message of the economic recovery thus far: Growth continues to be maddeningly slow in coming.