Disappointing news on economy sinks in

For months, it looked as if the economy was slowly but steadily improving, as the nation's payrolls expanded by roughly 200,000 jobs a month and the number of unemployed declined.

That was then.

This is now: a stalled job market with a scant 54,000 jobs created in May, according to the Department of Labor, an unemployment rate that crept upward to 9.1 percent, and an increase in the number of unemployed to 13.9 million.

"This is the new normal, learning to live with more uncertainty," said Robert Dye, senior economist at PNC Financial Services. "We're going to be talking about more and more soft patches."

Reacting to Friday's lackluster jobs report, stocks fell sharply in a hammering that continues the fifth straight week of market losses and the longest losing streak for the Dow since 2004.

The gloomy national assessment comes as Pennsylvania's legislators plan to convene in Harrisburg on Monday to argue over changes in how the state underwrites unemployment benefits.

Caught up in the debate is a technical wrinkle that will affect the final 20 weeks of unemployment benefits that Pennsylvania's jobless receive. Depending on what happens next week, 45,000 Pennsylvanians could face an immediate cutoff of some portion of these benefits starting next Saturday.

Pennsylvania's job situation is better than the nation's. The state's unemployment rate was 7.5 percent in April, compared with the nation's 9.0 percent the same month. The number of unemployed in Pennsylvania has been declining; still, 477,000 remain jobless.

The number of unemployed nationally rose in May to 13.9 million from 13.7 million in April, with 6.2 million out of work for more than 27 weeks. The average length of unemployment has increased to 39.7 weeks from 34.3 weeks a year ago.

In contrast to the generally positive reports issued over the last several months, nearly every sector showed declines in hiring in May.

The brightest spot was the service sector, with the biggest growth in professional and business services, especially accounting and computer services. Employment in health and education also continued to increase.

Employment in manufacturing, which had several surprising months of growth, fell, although local manufacturers say they have plans to hire, according to a survey of area manufacturers released in May by a local economic-development organization.

Nearly 9 in 10 area manufacturers surveyed in the winter by the Delaware Valley Industrial Resource Center said they had current job openings. Four in five said they would be adding jobs in the next 12 months.

Nationally, retail continued to drop, with the biggest fall in stores that sell building materials, reflecting slowness in the construction industry, which added a meager 2,000 jobs.

Government hiring fell by 29,000, with a staggering amount, 28,000 jobs, lost in local government.

That's not good news for Alonzo Walker, 25, of Chester, who just graduated from Kutztown University with a degree in public administration.

"The reality of the situation right now is that there are cuts in everything in the public sector," he said, while attending a job fair at Temple University on May 24. If he can't get a job, he plans to wait out the decline by volunteering in his field to keep his skills fresh.

Why the stalled growth?

Dye, PNC's senior economist, points to three sets of factors:

One set is transitory: the increase in oil prices, the fallout from the tornadoes and floods, and the bottleneck in the supply chain stemming from the Japanese earthquake and tsunami.

Another set he describes as "medium-term economic drags," among them consumers who are reluctant or unable to consume and the wretched housing and commercial real estate markets.

The third is more systemic, with the effects to be felt over the decade: Population growth is slowing, he said, and at the same time, the development pace of job-replacing technology is expanding.

"There is a lot going on in the economy, piling on to keep this a half-speed recovery - a slow-to-moderate economy that is vulnerable to downside risk," Dye said.

The number of jobs added marked the smallest monthly increase since September, when 29,000 jobs were lost.

Even so, any job expansion is good news for someone such as Vincent Tricome, a civil engineer from Chester Springs who had been out of work since July 2008, making ends meet by working at Wawa.

On May 2, Tricome rejoined a former employer for a part-time civil-engineering job that he hopes will become full time.

"I have stayed in touch with many of my previous employers over the years and it has paid off," he wrote in an e-mail. In the meantime, he's not giving up full-time work at Wawa.

"The economy just hasn't taken off," he said. "It's still bad out there."