Poor US jobs numbers raise growth fears
Published 04/06/2011 | 05:00
US payrolls grew at the slowest pace in eight months and the jobless rate unexpectedly climbed to 9.1pc in May, reinforcing signs that a slowdown in the world's largest economy is persisting into the second quarter.
Employers added a less-than-projected 54,000 jobs last month, after a revised 232,000 gain in April that was smaller than initially estimated, Labour Department figures showed yesterday in Washington.
The median forecast in a Bloomberg News survey called for payrolls to rise 165,000. The jobless rate climbed to the highest level this year from 9pc a month earlier.
Stocks fell on concern that a weaker job market will hurt the confidence of consumers, whose spending makes up 70pc of the economy, negating a decline in petrol prices.
The figures raise the odds the Federal Reserve will keep its benchmark interest rate near zero into next year, while also posing a challenge to President Obama, whose re-election prospects hinge on pushing the jobless rate lower.
"These are pretty bleak numbers," said Julia Coronado, chief economist for North America at BNP Paribas in New York, who projected a 75,000 gain in May employment. "Some of the engines of hiring just went away."
Stocks trimmed losses after another report showed service industries expanded more than forecast in May.
The yield on the benchmark 10-year Treasury note fell to 3pc from 3.03pc late on Thursday.
The Institute for Supply Management said its index of non-manufacturing businesses increased to 54.6 in May from 52.8 in April. The median estimate of 74 economists surveyed by Bloomberg projected the measure would rise to 54. A reading above 50 signals expansion.
Factories cut payrolls in May for the first time in seven months, the Labour Department said, partly reflecting a drop at motor vehicles and parts producers that may have been related to a components shortage after the Japan earthquake.
Employment at retailers, leisure and hospitality companies and state and local governments also decreased.
Economists at Barclays Capital cut their forecast for second-quarter economic growth to a 2pc annual rate from a prior estimate of 3.5pc. They also lowered the projection for Q3 to 3pc from 3.5pc. (Bloomberg)