Even with an impeccable cover letter and résumé, a job seeker might be hard-pressed to find work in the current employment climate...

Share story

Even with an impeccable cover letter and résumé, a job seeker might be hard-pressed to find work in the current employment climate.

Nervous employers are cutting back — unwelcome news to workers already facing higher-cost food and gas, a credit crunch and an ongoing housing slump.

Last Friday, the Labor Department said employers slashed a net 49,000 jobs in May. Though the numbers were better than expected, unemployment rose sharply to 5.5 percent in May from 5 percent in April. Construction and professional/business services saw the steepest job losses.

Citi Investment Research analyst Ashwin Shirvaikar calls the hiring slowdown widespread and says the “sheer weakness” of the data should outweigh the fact that it came in better than expected.

Carl Steidtmann, chief economist at Deloitte Research, expects the labor market to contract for the rest of the year. “I think we’re in a mild recession that will drag on for some time,” he says.

Economists also worry about a decline in temporary help. In May, employers slashed 30,000 temp jobs; they’ve cut 193,000 since December 2006.

Steidtmann says employers typically hire temps as soon as the economy shows signs of turning around because it allows them to meet staffing needs without a commitment. “They’re the first to get hired and the first to get fired,” Steidtmann says.

Looking ahead, he expects more cuts in the beleaguered financial sector. “It takes time to work through all of that. There’s a lot left to come there,” he says.

On the positive side, employers added jobs in government, leisure and hospitality, education and health care.

Health-care staffing companies are well-positioned, writes BMO Capital Markets analyst Jeffrey M. Silber, noting the aging population and advances in medical technology should benefit AMN Healthcare Services (AHS) and Cross Country Healthcare (CCRN).