The U.S. economy has officially stalled.
The government said Friday that a scant 54,000 nonfarm jobs were created last month, not even close to the already-lowered estimates of 150,000 economists had expected, raising fears that a prolonged period of weakness is on the horizon.
The unemployment rate rose to 9.1% from Aprils 9%, and private-sector employers added just 83,000 jobs last month, the lowest total in about a year. Government employment dropped by 29,000.
The monthly jobs report is easily the most highly anticipated of all economic data, and todays numbers took on even more meaning after Wednesdays horrific reading from payroll processor ADP.
That reading showed an increase of just 38,000 jobs last month, nowhere close to what economists had predicted. Indeed, after that release the estimates for todays government numbers came down sharply.
The latest report on the health of the jobs market will do nothing to alleviate fears that the U.S. economy has hit a soft patch, if not something worse. As the jobs market continues to search for momentum, other vital areas of the economy appear to be weakening, and the housing market is essentially in its version of a depression.
The employment situation will be one major key to reviving the real estate market, but there is nothing to suggest a turnaround in either is coming soon. In fact, the average duration of unemployment rose last month, to 39.7 weeks from 38.3, the highest on record.
Meanwhile, concerns are now spreading to one sliver of the economy that had been performing well: manufacturing. A reading earlier this week from the Institute for Supply Management showed a fairly noticeable decline in the pace of manufacturing growth. The new orders component of that report, perhaps the leading indicator of the health in manufacturing, dropped off sharply.
"Arguing about the merits of whether QE3 would be a good idea is irresponsible right now," said Todd Schoenberger, Managing Director at LandColt Trading. "It would be proactive for the FOMC to discuss, and develop a strategy for implementing QE3, because it's painfully clear the United States is headed for a very messy second half of 2011."