Friday June 5, 02:31 PM
US unemployment hits 9.4%, but job losses slow
By Rob Lever
WASHINGTON (AFP) - The US unemployment rate surged to a 26-year high of 9.4 percent in May, while the number of job losses slowed to a better-than-expected 345,000, government data showed Friday.
The Labor Department monthly report, seen as one of the best indicators of economic momentum, offered conflicting signals about a weak labor market, but suggested that the pace of massive job cuts appeared to be easing.
The number of nonfarm jobs shed in the economy was much lower than the 520,000 expected and better than the revised figure of 504,000 in April. It was also about half the monthly decline of the past six months.
Revisions to prior data also showed a slowing from a brutal pace of job cuts for the recession-ravaged economy.
The number of losses for March was revised from 699,000 to 652,000, and the decline for April was revised from 539,000 to 504,000.
But the unemployment rate, based on a separate survey of households, rose sharply from 8.9 percent to a worse-than expected 9.4 percent, highest since August 1983.
Some said the report along with revisions to March and April data showed the recession-ravaged economy may have hit bottom, consistent with the notion of "green shoots" of recovery cited by Federal Reserve chairman Ben Bernanke.
"We have not just 'green shoots' but an authentic sighting of the Jolly Green Giant himself," said Robert Brusca at FAO Economics.
"Forget the unemployment rate. It lags. Jobs are doing what they do at end recessions and in early recoveries."
Others offered a more cautious outlook.
"I think the green shoots story may be a bit premature," said Mark Vitner, economist at Wachovia Corp (NYSE: WB - news) .
Vitner said that even though job losses are easing, people are still having trouble finding employment.
"There is no indication of any hiring," he said. "What would be a green shoot if we saw a pickup in temporary hiring but this has slowed."
The report showed the goods producing sector shed 225,000 jobs including 156,000 in manufacturing and 59,000 in construction.
Services lost 120,000 positions including 18,000 in the retail sector.
The latest figures showed 14.5 million people unemployed in May, a figure that has risen by seven million since the start of the recession in December 2007. In that time the unemployment rate has grown by 4.5 percentage points, the agency said.
Patrick O'Hare at Briefing.com said financial markets appeared to react positively to the headline figure on job losses, but argued that the report "doesn't contain good economic news."
He said the report shows a drop in hours worked, suggesting "hiring isn't likely to pick up soon."
Additionally, he said the increase in long-term unemployment and underemployment "doesn't set a good stage for a meaningful pickup in consumer spending, even if it sets the stage for an opening (stock market) rally."
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