U.S. economy: Rise in U.S. payroll 54,000; Unemployment Climbs
June 3 (Bloomberg) - payroll grew the slowest pace in eight months and the U.S. unemployment rate unexpectedly rose to 9.1 percent in May, reinforcing signs that a slowdown in the world's largest economy remains u200b u200bin the second quarter.
Employers have a less-than-expected 54,000 jobs last month after a revised 232,000 gain in April that was smaller than initially projected, Labor Department figures showed today in Washington. The median forecast in a Bloomberg News survey calls for payrolls to rise 165,000. Unemployment climbed to its highest level this year of 9 percent one month earlier.
Stocks fell on concern that a weaker job market, the confidence of consumers, whose spending represents 70 percent of the economic pain, a negative drop in gasoline prices. The figures increase the chances of the Federal Reserve will keep benchmark interest rate close to zero in the coming years, while a challenge to President Barack Obama, whose reelection prospects hinge on pushing the unemployment rate lower.
These numbers are pretty bleak, said Julia Coronado, chief economist for North America at BNP Paribas in New York who projected a 75,000 gain in the employment. , some of the engines of hiring just went away.
Stocks trimmed losses after another report today showed that the service sector expanded more than expected in May The Standard u0026amp; Poor s 500 Index fell 0.5 percent to 1306.57 at 12:14 in New York after falling as much as 1.2 percent. The yield on the benchmark 10-year Treasury bill fell to 3 percent from 3.03 percent late yesterday.
The Institute for Supply Management said today that its index of non-manufacturing businesses rose to 54.6 in May from 52.8 a month earlier. The average estimate of 74 economists surveyed by Bloomberg expected the measure would lead to 54. A reading above 50 signals expansion.
Factories cut payrolls in May for the first time in seven months, the Labor Department said, partly reflecting a decrease of motor vehicles and parts manufacturers who may have a shortage of related components following the earthquake in Japan. Employment in retail, leisure and hospitality businesses and state and local governments also decreased.
Economists at Barclays Capital Inc. today cut their forecast for second quarter economic growth to 2 percent per annum from an earlier estimate of 3.5 percent. Also lowered the forecast for the third quarter from 3.5 percent to 3 percent.
The rise in inflation over the period from December to April clearly consumers' purchasing power and consumer spending hurt , Barclays Capital spokesman Seth Martin said in an e-mailed statement.
Wave of data
Today's report makes it more likely the Fed will signal that its balance sheet to keep a record boost for the economy after the end of 600 billion U.S. dollars in bonds purchases this month, a policy known as the QE2 for second round of quantitative easing. Central bankers meet again June 21 to 22.
This really suggests all will be waiting longer for the Fed , said John Silvia, chief economist of Wells Fargo Securities LLC in Charlotte, North Carolina. , I can not imagine they would be shrinking the balance after finishing QE2 given the uncertainties. They are alert to caution in this regard. We are not creating jobs.
Companies are still reducing their workforce HJ Heinz Co., world's largest ketchup maker, announced plans in May to as many as 1,000 jobs worldwide and close five factories slash. Dean Foods Co., the biggest U.S. milk processor, said it cut 600 positions last quarter and 140 at the beginning of the quarter.
Austan Goolsbee, Obama's chief economist, said the jobs report provides a small bump , the road to recovery and that the wider trends , significantly more positive , then when Obama took office in January 2009.
, we have never too much in the report of any month to read, , Goolsbee, chairman of the Council of Economic Advisers, said in an interview on Bloomberg Television. no doubt that we face some headwinds.
Employment and economic growth can be returned as components of the supply disruptions caused by the earthquake and tsunami ease Japan, said David Resler, chief economist at Nomura Securities International Inc. in New York.
, supply chain disruptions from the earthquake in Japan, the automotive and related industries affect, he said. There is a bit of a slowdown that we believe will be temporary.
Consumers are also becoming a little help from a drop in gasoline prices. Consumer confidence rose for the second week in the period ended May 29 the Bloomberg Consumer Comfort Index showed yesterday.
Creating jobs remains a key factor during the economic recovery, but we expect better and better, , Don Johnson, vice president of U.S. sales at General Motors Co., said at a June 1 teleconference. , the environment for future hiring and investment not stay positive.
Economic growth slipped to a 1.8 percent annual pace in the first three months of the year from 3.1 percent in the previous quarter, revised figures from the Commerce Department showed last week. Today's report caps a series of data indicating a longer delay.
Production grew in May at the slowest pace in more than one year, according to Institute for Supply Management data this week, reinforcing concern the industry that led the U.S. to restore cooling.
House prices in 20 U.S. cities declined in March to its lowest level since 2003, figures from the S u0026amp; P / Case-Shiller index showed on May 31 Consumer spending grew less than expected in April as households feel the pinch of grocery and energy costs, a Commerce Department report showed.
The current accommodative stance of U.S. monetary policy remains appropriate, because unemployment remains high and inflation is expected to remain moderate over the medium term, , Fed Vice-President Janet Yellen said in a speech that Tokyo week.
Factory payrolls fell by 5,000 in May, compared with the survey forecast an increase to 10,000 after a 24,000 gain in April, today's report showed.
Private rental, which excludes government, took 83,000 last month. Private payrolls rose 251,000 in April, initially reported as a gain of 268,000.
The government payrolls fell by 29,000, due to reduced employment in state and local governments. Employment increased by 51,000 on service providers. Construction companies added 2,000 workers and retailers cut 5,000 jobs.
Average hourly earnings rose 0.3 percent to $ 22.98 in May, while the average workweek held at 34.4 hours, today's report showed.
The so-called underemployment rate - working part-time workers who want a full-time job and those who work but have given up looking for Preferably - was little changed at 15.8 percent after 15.9 percent in April.
The report also showed an increase in long-term unemployed Americans. The number of unemployed for 27 weeks or more has increased as a percentage of all unemployed, to 45.1 percent from 43.4 percent.
- With the help of Chris Middleton, Tim Homan, Bob Willis and Mike Dorning in Washington. Editors: Vince Goll, Christopher Wellisz
U.S. economy: Rise in U.S. payroll 54,000; Unemployment Climbs
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