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No Joy in Latest Jobs Report

The recovery of the U.S. economy as measured by an increase in employment and a decrease in the ranks of the unemployed stalled in May, according to the latest government figures. Business groups are concerned by the lack of stronger growth in jobs in core services other than health and education, with some placing the blame on unnecessary government regulation .

Nonfarm employment changed little in May, advancing by 54,000 while the unemployment rate remained stable at 9.1 percent, according to the employment situation report released today by the U.S. Bureau of Labor Statistics. The labor force, at 153.7 million people, was also little changed.

The ranks of the long-term unemployed (those jobless for 27 weeks and over) swelled by 361,000 to 6.2 million; they now account for nearly half (45.1 percent) of total unemployment.

"Job growth slowed substantially in May as the overall economy is starting to show choppiness," Kathy Bostjancic, director for macroeconomic analysis for The Conference Board, an independent business membership and research association, said in a statement. "There is some weakness in manufacturing and construction. The real story, however, is the lack of stronger job growth in 'core' services, which excludes the secular gains in health and education. Relatively modest gains in consumer spending are limiting job growth in 'core' services. With households worried about high gas and grocery prices , and the slow pace of wage gains, spending could even slow a little more this summer. Employers spent a great deal of time and attention reducing costs over the past few years and are reluctant to add to their cost structure unless they can be certain the economy will not hit a soft patch. This degree of caution could remain in evidence right through Labor Day."

“Today’s increase in the unemployment rate underscores the need for dramatic action to break down barriers to job creation," said John Engler, president of Business Roundtable, a business advocacy group. "First among these are unnecessary regulations. Regulations are both a drag on job creation and on the economy. Regulations are ‘hidden taxes’ that strangle job creation. We need action by government agencies to clear out obsolete rules and streamline permitting to reduce delays and impediments for companies to invest and grow. The private sector is the only hope for future job creation. We need to recognize this and work together to let businesses, small and large, invest in people.”

The Small Business and Entrepreneurship Council (SBE Council) said May's jobs numbers are not surprising given flawed government policies that continue to jack up business costs and fuel uncertainty. Last month, the unemployment rate increased to 9.1 percent, and employers only added 54,000 jobs, according to the U.S. Department of Labor.

"Energy and health care costs are rising, and additional policy uncertainties remain a drag on small business confidence," said Karen Kerrigan, president and CEO of the SBE Council. "The central barrier to business growth and job creation is bad government policies. Yet, the administration appears set in its way on moving forward with a costly health care plan, regulations and proposals that will drive energy costs higher, and a wide-ranging set of other policies that will impact the availability of capital and investment across sectors."

Raymond J. Keating, the SBE Council's chief economist, added, "This jobs data is not surprising in that it reflects a continuing grossly underperforming economic recovery. And small business owners are not a confident bunch these days, especially given the challenges of high energy costs and the uncertainties swirling around governmental policies. In the end, job creation is overwhelmingly about small business, and little has been done to boost confidence in this sector."