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Unemployment rate edges higher, spells bad news for housing

Disappointing job creation figures for May show a slowing economy, a trend that could resurrect talks of further quantitative easing, Capital Economics claimed Monday.

The month of May was uneventful on the jobs front with the nation creating only 69,000 jobs, the government said Friday. 

That compares to 115,000 job increases in April when unemployment was at 8.1%, according to the U.S. Bureau of Labor Statistics.

Meanwhile, the unemployment rate in May edged back up to 8.2%.

Analysts with Econoday claim the drop in new jobs is a sign of the “economy slowing sharply.”

Doug Duncan, chief economist for Fannie Mae, said the slowdown is “reminiscent of the monthly patterns of the spring slowdown witnessed over the last two years that continued through the summer months.” He added, “if this pattern recurs, we expect that homes for a meaningful housing recovery will be delayed once again.”

Work segments like health care, transportation, warehousing and wholesale trade gained jobs, while lackluster real estate markets led to further declines in construction work.

In May, 12.7 million Americans were listed as unemployed, which is in line with April figures, suggesting little to no positive momentum.

A person’s age has a great deal to do with whether or not they are employed. The unemployment rate for adult men hit 7.8%, for women it sits at 7.4%. Young adults are having the hardest time finding work with their unemployment rate standing at 24.6%.

Paul Ashworth, a senior economist with Capital Economics, said, “Given the marked slowdown in employment growth, Federal Reserve Chairman Ben Bernanke’s congressional testimony on the economic outlook next Thursday is now going to be even more closely watched for any hint that QE3 is coming.” He added, “We still don’t think it is the near certainty some commentators seem to believe.”

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