Unemployment Rate Dips to 9.7%

The nation's unemployment rate dropped from 9.9 percent to 9.7 percent in May, as the economy added 431,000 jobs last month, the ""Labor Department reported Friday"":http://www.bls.gov/news.release/empsit.nr0.htm.

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The job market growth, though, is being called ""disappointing"" since nearly all of the new positions were temporary workers hired by the U.S. Census. The private sector counted only 41,000 new jobs in May.

Nigel Gault, chief U.S. economist for ""IHS Global Insight"":http://www.ihsglobalinsight.com, commented, “The disappointing news today is that the market isn't close to as strong as it looked based on the April figures,” when the private sector added a healthy

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218,000 jobs. But, Gault added, “We do not yet have the makings of a double-dip, and we still believe that private sector job creation will gradually improve over the rest of the year.”

Gault notes that rising employment is key to a sustained revival in housing activity, particularly since a “sharp payback” in home sales is on the way for the immediate future as the homebuyers’ tax credit comes to an end.

Along with the new May numbers, the Labor Department provided a more detailed explanation of the previous month’s unemployment figures by industry. The online resource ""MortgageStats.com"":http://mortgagestats.com/macro/ offers an in-depth breakdown of the mortgage-related data.

Residential mortgage companies cut 5,500 full-time workers from their payrolls in April. That follows a downsizing of 1,500 jobs in March. The mortgage banker/broker workforce fell to 247,900 positions in April, compared to 253,400 in March.

MortgageStats.com says this poor showing came amid reports of hiring by servicers in their loan modification units. But, the online data provider points out that although the servicing sides of many firms are hiring, production jobs are being cut because of weak loan demand, which is expected to weaken even further now that the federal homebuyer tax credit has expired.