Transcripts

The Good News Bad News Labor Report

SUZANNE PRATT: The nation's unemployment rate is now 9.4 percent, the highest level in more than 25 years. The half percentage point jump from April to May was much more than economists expected. But the news is not all bad. The Labor Department also reported the pace of layoffs is easing. Employers cut 345,000 jobs last month, the fewest since September and the fourth straight month of slowing layoffs. Scott Gurvey takes a look at whether the labor market is finally stabilizing.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: A big jump in the number of people looking for work in May brought the unemployment rate to its highest level since 1983. But ironically, that can be seen as positive, a sign once-discouraged job seekers have resumed their hunt. While it is difficult to take comfort from the news 345,000 people lost their jobs in the month, that number was far lower than expected. One economist told me today it's still getting worse, but at a slower rate. The last 10 months form a V-shaped pattern of collapse and recovery of the job market. But Brian Fabri of BNP Paribas says the rebound is likely to flatten into a sluggish pattern like we saw last year, the first year of the recession.

BRIAN FABBRI, CHIEF ECONOMIST, BNP PARIBAS: As business cycle history shows, we've always had a year or so of no growth in jobs after the recession ends. And so therefore, if we really are sure that this is the end of the recession this year, the end of this year, I would think there will be very, very little job growth created in 2010.

GURVEY: The employment report is a trailing indicator. Career builder, an online want ad site, looks ahead by posting jobs yet to be filled. CEO Matt Ferguson now sees some signs of increased activity.

MATT FERGUSON, CEO, CAREERBUILDER.COM: When we look at the economy, we still see some good movement in job creation and opportunity in sales, customer service. Certainly, the numbers today would be consistent with what we see in health care. Education also seems fairly strong. So those would be the areas where we are seeing some good, I would say, stability in the labor market today.

GURVEY: Vice President Joe Biden said today the administration plans to ramp up its economic recovery efforts. The first part of the stimulus package has already hit the economy in the form of rebate checks and lower withholding taxes. But other elements like payments to states and infrastructure projects will take years to arrive and economists say even then, the effects will be limited.

FABBRI: People wound up with a little bit more income, which on balance, they saved. We haven't seen any increases in employment as a result. It's very difficult to tell whether or not you'll ever have it as a result of a given program, but frankly, the employment gains from this fiscal stimulus package were never going to be very large.

GURVEY: The unemployment rate is usually the last indicator to change direction in a turnaround and many economists believe it will get well above 10 percent before it begins to come down. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.