Pa. unemployment rate rises to 5.5 percent |
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Pa. unemployment rate rises to 5.5 percent

May proved to be a difficult month for Pennsylvania’s job market as employers slashed thousands of jobs amid a nationwide slowdown in hiring.

Employers across the state cut 10,200 people from payrolls and the unemployment rate increased to 5.5 percent, the Pennsylvania Department of Labor & Industry reported Friday. It was the third consecutive monthly increase in the unemployment rate, which has risen nearly a full percentage point since February, when it was 4.6 percent.

Given signs of weakness in Pennsylvania and the nation, job seekers could be in for a rough summer, said Frank Gamrat, an economist at the Allegheny Institute for Public Policy.

“This is pointing in the wrong direction,” Gamrat said. “It’s going to be a damp summer, job-wise.”

Pennsylvania has lagged employment growth nationally and hiring across the United States slowed dramatically in May. Employers in the United States added 38,000 jobs that month, the worst since September 2010 and far less than the average monthly gain of 200,000 during the past year. Over the year, Pennsylvania’s job growth has been 0.7 percent, compared to 1.7 percent nationwide.

A strike by Verizon workers contributed to losses in information services, which posted the steepest declines of any sector in Pennsylvania. But there were widespread pullbacks across both service and goods-producing industries that pointed to broader trouble.

The state lacks a robust industry to spark faster growth, especially in relatively high-paying goods-producing industries, said Kurt Rankin, an economist at PNC Financial Services Group.

Demand for goods produced here — especially natural gas and steel — has plummeted. Low natural gas prices have forced energy producers to cut back and competition from cheap foreign imports has hurt steelmakers.

Most of the state’s job growth has come from the service sector, but that is unlikely to continue if consumers rein in spending with weaker job prospects, economists said.

The Conference Board Consumer Confidence Index has declined the past two months, although so far it hasn’t affected spending. The Commerce Department said this week that retail sales rose 0.5 percent last month after a 1.3 percent gain in April.

Consumer spending accounts for two-thirds of the economy. And businesses in the leisure and hospitality sector, which typically ramp up hiring during summer vacation season, cut payrolls last month. Pennsylvania’s leisure and hospitality sector lost 3,600 jobs in May.

That doesn’t bode well for new entrants to Pennsylvania’s job market in the months ahead. Last month, 15,000 more people began looking for work, contributing to an increase of two-tenths of a percentage point in the unemployment rate. People who are not looking for work are not counted as unemployed.

An expanding labor force usually is a positive sign because it suggests people are confident about their prospects. But if those new workforce entrants can’t find jobs, it could lead to declining consumer confidence and further strain Pennsylvania’s economy.

“I don’t expect recession to be a watchword,” Rankin said. “But a rising unemployment rate, weaker conditions, consumer industries taking a hit … now we’re talking about a less stable and slightly weakening economy over the next several months for Pennsylvania.”

Chris Fleisher is a Tribune-Review staff writer. Reach him at 412-320-7854 or [email protected].

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