U.S. unemployment rate up in May

Employment rose by only 54,000 jobs in May, raising the unemployment rate to 9.1 per cent, the U.S. Bureau of Labour Statistics reported Friday.

The April rate was nine per cent.

The May report said 13.9 million Americans are officially unemployed, and another 8.5 million (sometimes called involuntary part-time workers) are working fewer hours than they want. Those people are working part-time because their hours had been cut back or because they couldn't find a full-time job.

The tiny gain in jobs — headed by increases in professional and business services, health care, and mining — is bad news for the sputtering economy.

Analysts have been steadily cutting back their estimates of the gain in May, from as much as 300,000 several months ago to around 100,000 recently. The May figures will fuel concern that the U.S. economy is slowing, adding to problems posed by high gas prices, the continuing weak housing market, European debt and the political standoff over the U.S. deficit.

"Economic activity has clearly hit a soft patch," but it's not clear if it's temporary or a more permanent slowing, said Steven Wood, chief economist for Insight Economics.

The 54,000 new workers hired in May was the smallest  number in eight months, and is a sharp drop from the three previous months, when the gain averaged 220,000 jobs.

Private employers hired 83,000 people in May, the smallest number in nearly a year. Local governments cut 28,000 jobs, making it 22 months in a row of cuts.

"Local government has lost 446,000 jobs since an employment peak in September 2008," the department said.

Stock futures plunged after the report was released.