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US economy adds 175,000 jobs in May

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US economy adds 175,000 jobs in May

us unemploymentBBC News-US employment rose by slightly more than economists had predicted during May.

The latest US non-farm payrolls show that 175,000 jobs were created last month. But the unemployment rate increased slightly to 7.6%.

Shares had mostly fallen in the run up to the figures, as investors worried that a strong report could lead the Fed to slow its bond-buying programme.

That programme has fired up a rally in the US equities market this year.

At close on Wall Street on Friday, the Dow Jones had climbed 207.50 points, or 1.38%, to 15248.12. The broader S&P 500 rose 20.82 points to 1643.38, while the Nasdaq added 45.17 points to 3469.22.

Austerity programme

“Both the number of unemployed persons, at 11.8 million, and the unemployment rate, at 7.6%, were essentially unchanged in May,” said the Labor Department in a statement.

May was the third month in a row that non-farm payrolls increased by less than 200,000, stoking fears that the US government’s austerity might be harming the economy.

The spending cuts were highlighted in the latest jobs report as the federal government cut 14,000 jobs. There were also job cuts in manufacturing.

However, there were job gains in professional and business services, leisure and hospitality and retail.

‘Good number’

The latest figures mean that it appears unlikely that the Fed is about to rein in the bond-buying programme, which is aimed at lowering interest rates and boosting employment.

“What’s made a good number is the fact that it’s not extreme on either side, and gives the prospect that investors are looking for, which is a continued slow recovery without any likelihood of any rapid rate rise by the federal government,” said Rick Meckler, president of LibertyView Capital Management in New Jersey.

And Chris Williamson, chief economist at Markit, said the Fed would “watch the incoming data flow on business activity and demand closely over the coming months before making clear signals on policy changes”.

In May, the number of long-term unemployed – those jobless for 27 weeks or more – was unchanged at 4.4 million. These individuals accounted for 37.3% of the unemployed.

Meanwhile, March’s job creation figure was revised to 142,000 from 138,000, and April’s to 149,000 from 165,000.

Separate data on Friday from the Federal Reserve showed that US consumer borrowing rose in April for the twentieth month in a row.

Borrowing rose $11.1bn (£7.1bn) in April from March to a seasonally adjusted $2.82 trillion. Most of that gain came from a category that includes car loans and student loans, while credit card use also saw a modest rise.

More borrowing could help boost consumer spending, which makes up 70% of economic activity in the US.

Tags assigned to this article:
US economyUS employment

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