Unemployment Rate Rises Slightly Even as Economy Adds 175,000 Jobs  

The Labor Department announced today that the economy added 175,000 jobs in May, a pretty good result marred by a slight uptick in the unemployment rate to 7.6 percent.

Why would the unemployment rate rise even as the economy adds jobs? Well it’s possible that a lot of extra people have been pulled into the labor market by improving conditions. But it also could just be a statistical discrepancy. As I wrote yesterday, these figures are based on two separate surveys so they can move in different directions. The BLS also wrote that “among the major worker groups, the unemployment rates for adult men (7.2 percent), adult women (6.5 percent), teenagers (24.5 percent), whites (6.7 percent), blacks (13.5 percent), and Hispanics (9.1 percent) showed little or no change in May.” That gives you a glimpse at how small the shift in the unemployment rate is. After all, if there’s no change for adult men or for adult women or for teenagers then it’s not really possible to have a large shift.

The bad news here is that we had a slight (~12,000 jobs) downward revision to the previous two months.

Per usual, the private sector added jobs while the public sector shed them. But the interesting wrinkle this month is that local government actually added quite a few jobs—13,000 in fact, of which more than 7,000 were teachers—but the increase in local government employment was offset by a large decline in federal employment. We have 3,800 fewer postal workers than we had a month ago, and 9,400 fewer non-postal federal employees. We seem, in other words, to be seeing some of the direct employment impact of sequestration.