Another Lousy Jobs Report

NEW YORK (TheStreet) -- The economy added only 69,000 jobs in May -- only about half of what is needed to keep up with natural population growth. The unemployment rate rose to 8.2%.

In the weakest recovery since the Great Depression, nearly the entire reduction in unemployment since October 2009 has been accomplished through a significant drop in the percentage of adults working or looking for work. Some of these folks returned to the labor market in May; consequently, unemployment ticked up a tenth of a percentage point.

Growth slowed to 1.9% in the first quarter from 3% the previous period, and was largely sustained by consumers taking on more car and student loans, business investments in equipment and software and some inventory build. The housing market is improving and that should lift second-quarter residential construction a bit but overall, the economy and jobs growth should remain too slower to genuinely dent unemployment.

The May jobs report indicates growth could be even slower in the second quarter, and the economy is dangerously close to stalling and falling into recession.

Manufacturing added 13,000 jobs. Other big gainers were health care, wholesale trade and transportation and warehousing.

Construction lost about 28,000 jobs, and other big losers were leisure and hospitality and state and local governments.

In other sectors, jobs gains were weak or small numbers of jobs were lost.

Gains in manufacturing production have not instigated stronger improvements in employment largely, because so much of the growth is focused in high-value activity. Assembly work, outside the auto patch, remains handicapped by the exchange rate situation with the Chinese yuan.

Recent moves by China to further weaken its currency and to close its markets to stimulate its own flagging demand indicate matters will get worse without a substantive response from Washington. Also, concerns about health insurance costs, once Obama Care is fully implemented, are discouraging employers.

The economic crisis in Europe and mounting problems in China's housing and banking sectors continue to instigate worries among U.S. businesses about a second major recession, and these discourage new hiring. The U.S. economy continues to expand albeit moderately but is quite vulnerable to shock waves from crises in European and Asia.