Job gains beat forecasts as U.S. weathers budget cuts

Household Survey

The household survey, used to calculate the unemployment rate, showed a 420,000 increase in the size of the labor force, exceeding the 319,000 gain in employment and pushing up the jobless rate from a four-year low.

The report also showed sequestration, or the automatic across-the-board federal spending cuts that began in March, may be having an impact on government payrolls. Employment at federal agencies excluding the postal service showed a 9,400 decrease last month. Private payrolls, by contrast, increased 178,000 in May after a 157,000 gain the prior month.

Alan Krueger, chairman of the White House Council of Economic Advisors, used the report to repeat his call to Congress to replace across-the-board budget cuts with what the Obama administration calls “balanced deficit reduction.”

“We’re seeing losses of government jobs,” Krueger said in an interview on Bloomberg Television. “We’re making progress, but we would do even better if Congress would get out of the way.”

Manufacturing saw employment decline for a third month, falling 8,000 in May after a 9,000 decrease in the previous month, as slowing global growth curbed orders.

Employment at private service providers climbed 179,000 last month, and temporary-help agencies added 25,600 jobs. Retailers took on 27,700 employees, the most in six months.

Housing Recovery

Construction companies added 7,000 workers, reflecting the housing recovery that’s helping to power economic growth and offsetting some of the recent weakness in manufacturing.

Among the beneficiaries is Fluor Corp., an engineering and equipment company based Irving, Texas. The company expects its global staff to grow from 13,500 to 15,000 by the end of the year, said Peter Oosterveer, president of energy and chemicals.

Wage growth remains “modest,” with pay up between 3% and 5% in North America and Europe, Oosterveer said at a conference yesterday.

Jane Hillerby, 56, was living in Reno, Nevada, and commuting to San Francisco when she lost her job as a manufacturing consultant in January. With degrees in engineering and business, she was confident she could find work closer to home.

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