Payrolls Dropped in 27 U.S. States in May, Led by California

June 17, 2011, 10:48 AM EDT By Shobhana Chandra

June 17 (Bloomberg) -- Payrolls dropped in 27 U.S. states in May, indicating the weakening in the job market was broad- based.

California led the nation with a 29,200 decrease followed by New York with 24,700 fewer jobs, figures from the Labor Department showed today in Washington. The jobless rate fell in 24 states and rose in 13.

The report is consistent with nationwide figures released June 3 that showed employers added 54,000 workers in May, the fewest in eight months, and unemployment rose to 9.1 percent, the highest this year. Improvement in hiring across a wider swathe of the U.S. is needed to sustain consumer spending, which accounts for about 70 percent of the U.S. economy.

“Hiring is occurring but the job market is definitely not strong,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Corporations are not going to hire in droves until they are certain that the economic recovery is on terra firma.”

Payrolls fell by 14,200 in Pennsylvania, by 13,400 in Michigan and by 13,300 in Maryland, rounding out the top five states with the biggest declines in employment.

Florida, with an increase of 28,000, and Ohio, with a 12,000 advance, showed the biggest gains in hiring. In all, employment climbed in 22 states.

New Mexico showed the largest over-the-month drop in unemployment, as its jobless rate fell to 6.9 percent from 7.6 percent in April.

Highest, Lowest

Unemployment in Nevada remained the highest in the nation even as it fell to 12.1 percent in May from 12.5 percent the prior month. North Dakota’s jobless rate fell from 3.3 percent to 3.2 percent last month, the lowest in the U.S.

While the world’s largest economy has added jobs for eight consecutive months, the lack of a pickup in hiring makes it more likely that the Federal Reserve will keep its benchmark interest rate near zero into next year. The labor market also poses a challenge to President Barack Obama, whose re-election prospects hinge on pushing the jobless rate lower.

“Economic activity generally continued to expand since the last report, though a few districts indicated some deceleration,” the Fed said June 8 in its Beige Book survey of the economy. The job market improved “gradually across most of the nation.”

New Jersey’s unemployment rate climbed by 0.1 percentage point to 9.4 percent in May as the state lost 400 jobs, according to government data. The state’s jobless rate stayed at 9.3 percent in March and April as more people entered the workforce.

Budget Cuts

Further cutbacks in employment are expected as state and local governments try to cope with budget restraints. New Jersey’s 13-member Senate Budget Committee yesterday approved a plan to require government workers to pay more for health care and pensions.

State and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures are subject to larger sampling errors because they come from smaller surveys, making the national figures more reliable, according to the government’s Bureau of Labor Statistics.

--Editors: Carlos Torres, Vince Golle

To contact the reporters on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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