Fewer states added jobs in May

Have you heard? Economy-watchers (and incumbent office-holders) are saying the U.S. economy added nearly two million jobs in the past 15 months. Why focus on 15 months? Because that particular time frame produces the most favorable job-growth figure in an environment where everybody is looking for whatever scraps of good news they can find.

Have you heard? Economy-watchers (and incumbent office-holders) are saying the U.S. economy added nearly two million jobs in the past 15 months. Why focus on 15 months? Because that particular time frame produces the most favorable job-growth figure in an environment where everybody is looking for whatever scraps of good news they can find. The numbers are correct.

U.S. employment as of May was 131 million nonfarm jobs, seasonally adjusted. February of 2010, 15 months earlier, was the low point for employment in the current cycle, with 129 million jobs. Comparing high to low, the difference is a gain of two million jobs. But why not compare May's 131 million jobs with the end of the recession, June of 2009? Wouldn't that tell us more about the strength of the recovery?

Maybe, but since employment in June of 2009 was 130.5 million, the increase of only 500,000 jobs over nearly two years wouldn’t be much to cheer about. Of course, those who like to wallow in depressing statistics need only compare the current 131 million jobs with employment of 138 million at the end of 2007, when the recession began. The deficit stands at seven million jobs that still must be replaced just to get back to pre-recession levels.

How are we doing compared to last year?

Rather than strategically picking job growth time frames to alternatively spread gloom or glee, analysts often compare employment in the current month with the same month in the year before. This approach answers the simple question, "How are we doing compared to last year at this time?" The answer for May is not particularly encouraging.

The number of states adding jobs dropped again from the 48 that posted employment gains in March. Only 39 states recorded higher employment in May, compared to a year ago, while 11 states lost jobs over the same 12 month period, according to figures released by the U. S. Bureau of Labor Statistics.

In April, 44 states gained jobs. (Note: over-the-year figures are not seasonally adjusted). Of those states with higher employment, more than one third had jobs gains of less than one half of one percent, barely moving the job growth meter into the positive zone.

States losing jobs over-the-year in May showed no clear geographical pattern, ranging from New Mexico and Nevada in the Southwest to Maine in the Northeast, to New Jersey, Maryland and Delaware in the mid-Atlantic region, to Alabama, Georgia and Mississippi in the South, and Indiana and Kansas in the nation’s heartland. Among those states losing jobs in May, Georgia recorded the biggest decrease, with a decline of 28,300.

Besides Georgia, several former high-flyers during the housing boom continue to struggle with sluggish job creation. Arizona added only 4,000 jobs over-the-year in May, growing by less than one-half percent and ranking 36th among all states. Florida was in 37th place, while Nevada’s jobs losses ranked the Silver State 46th. New Mexico’s loss of 6,300 jobs and a minus 0.8 growth rate placed the state in 50th position.

North Dakota still ranks first

North Dakota remains in a class by itself, posting the fastest rate of employment growth over-the-year again in May, up 3.9 percent. North Dakota has ranked as the fastest growing state for 25 consecutive months, beginning in the summer of 2009.

After North Dakota, the states ranked among the top 10 fastest growing (in order) were Texas, Nebraska, Wyoming, Utah, Oklahoma, Oregon, Ohio, Michigan, and Illinois. With nonfarm employment up by 198,000, Texas added the greatest number of new jobs over-the-year in May. California jobs were up by 78,000 during the 12 months.

Positive but mostly unspectacular gains

The nation as a whole added 952 jobs between May of this year and last year, for a growth rate of 0.7 percent. The May increase was weaker than April, when the economy grew by 1.4 million jobs over-the-year and the rate of increase was one percent. Employment statistics show the same growth pattern as real output, measured by Gross Domestic Product.

Gains in GDP have been positive but mostly unspectacular for seven consecutive quarters. Meanwhile, employment has increased over-the-year for nine straight months. Through May, the year-to-date job creation for the U. S. stands at 1.1 million, but with a growth rate below the one percent mark.

As a rough approximation, a growth rate of just over 1.5 percent must be sustained to add two million jobs for the year. Although 2011 is on pace to be the first year of national employment gains since 2007, without a pick-up in activity in the second half, it seems unlikely the tally for the year as a whole will approach the two million new jobs hoped for by optimists and incumbent office-holders.