Jobless Rate Rises, Mild Drop in Payrolls
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By Caren Bohan
WASHINGTON (Reuters) - The U.S. unemployment rate rose in May to its highest level in nearly nine years but an unexpectedly mild jobs drop and an overhaul earlier figures fueled hopes the soft economy may be poised for a pickup.
Equity futures prices and the dollar gained while bond prices eased following Friday's key employment report from the Labor Department (news - web sites).
The unemployment rate inched up to 6.1 percent, the highest level since July 1994, from 6.0 percent in April, Labor said. Employers cut 17,000 workers from their payrolls in May -- a smaller decline than the 39,000 drop projected by U.S. economists in a Reuters survey.
The May jobs report included a major change in how Labor compiles its survey and calculates its results. These changes rendered the recent job picture less gloomy than it had appeared in earlier government estimates.
April payrolls were revised to an unchanged reading after Labor had earlier said they tumbled 48,000. However, March was revised down to show a 151,000 jobs drop versus an earlier 124,000 fall. In total, 151,000 jobs were lost over the two months, an improvement from Labor's prior report of a 172,000 slide in payrolls.
Before the jobs report came out, some investors were betting the Federal Reserve (news - web sites) might cut interest rates by as much as an aggressive half-point at its upcoming meeting on June 24-25. But the data persuaded some analysts that the cut might be a smaller quarter-point. A few thought the central bank could possibly even hold off on lowering rates altogether.
"What does this say about the Fed? I'm of the opinion that the Fed should practice some sort of tough love and not seek to lower rates at the next meeting," said Jeoff Hall, economist at Thomson IFR in Boston.
"If you believed that they were going to do at least 25, then I think this number confirms they would do only 25," he said.
Within the report, the data on hours worked and overtime were mixed. Total hours worked in the private sector stayed steady at 33.7 hours. But the factory workweek lengthened slightly to 40.2 hours from 40.1 hours.
Average hourly earnings rose 0.3 percent to $15.34.
36 minutes ago Add Top Stories - Reuters to My Yahoo!
By Caren Bohan
WASHINGTON (Reuters) - The U.S. unemployment rate rose in May to its highest level in nearly nine years but an unexpectedly mild jobs drop and an overhaul earlier figures fueled hopes the soft economy may be poised for a pickup.
Equity futures prices and the dollar gained while bond prices eased following Friday's key employment report from the Labor Department (news - web sites).
The unemployment rate inched up to 6.1 percent, the highest level since July 1994, from 6.0 percent in April, Labor said. Employers cut 17,000 workers from their payrolls in May -- a smaller decline than the 39,000 drop projected by U.S. economists in a Reuters survey.
The May jobs report included a major change in how Labor compiles its survey and calculates its results. These changes rendered the recent job picture less gloomy than it had appeared in earlier government estimates.
April payrolls were revised to an unchanged reading after Labor had earlier said they tumbled 48,000. However, March was revised down to show a 151,000 jobs drop versus an earlier 124,000 fall. In total, 151,000 jobs were lost over the two months, an improvement from Labor's prior report of a 172,000 slide in payrolls.
Before the jobs report came out, some investors were betting the Federal Reserve (news - web sites) might cut interest rates by as much as an aggressive half-point at its upcoming meeting on June 24-25. But the data persuaded some analysts that the cut might be a smaller quarter-point. A few thought the central bank could possibly even hold off on lowering rates altogether.
"What does this say about the Fed? I'm of the opinion that the Fed should practice some sort of tough love and not seek to lower rates at the next meeting," said Jeoff Hall, economist at Thomson IFR in Boston.
"If you believed that they were going to do at least 25, then I think this number confirms they would do only 25," he said.
Within the report, the data on hours worked and overtime were mixed. Total hours worked in the private sector stayed steady at 33.7 hours. But the factory workweek lengthened slightly to 40.2 hours from 40.1 hours.
Average hourly earnings rose 0.3 percent to $15.34.