Friday's report on employment for May was terrible. We have already looked at this from a number of different angles. Here, however, is the final summary. On an unadjusted basis, the economy created 480,000 fewer jobs than it did in April. Indeed, on an unadjusted basis, the economy shed close to 200,000 jobs in May.
One thing that cannot be overlooked is the effect that this news will have on future hiring. While it may confuse some to think that bad employment numbers mean lower hiring in the near future, think of it this way: Since the recession began, businesses across the country have been trying to keep profitable by cutting costs. While that process has been completed for the most part, executives are still in the mode of cost containment. They will not want to add employees and, as a result, costs, unless they feel confident that the economy will be growing a generating more business to cover these costs. Bad numbers like those in May will make employers skittish about hiring new people in June and July. In fact, until there is some clear indicator of stronger growth, the weak numbers will remain a cloud over the future and will lower future job growth.
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