Unemployment Rate Jumps to 5.5% in May
The unemployment rate rose from 5 percent in April to 5.5 percent in May — the biggest one-month jump since February 1986 — according to a report released by the Department of Labor Friday. The increase left the jobless rate at its highest since October 2004.
The report offers the latest evidence of a continuingly troubled economy, with shrinking job prospects in a time of continuing woes in the housing, credit and financial sectors as well as rising energy costs.
The spike in the unemployment rate appeared to surprise some economists who had been predicting a gentler rise to 5.1 percent. So far in 2008, job losses have totaled 324,000, the department said, according to Reuters.
“It was ugly,” Richard Yamarone, economist at Argus Research, told the Associated Press.
The number of people in the work force climbed by 577,000 in May, up sharply from an increase of 173,000 in April. Department officials noted that in the period from April through July, there usually is an increase in the number of young people seeking temporary work when school is out.
“The report suggests the trends in the labor market are quite weak.” Ethan Harris, the chief United States economist at Lehman Brothers, told the New York Times.
A year ago, the number of unemployed stood at 6.9 million and the jobless rate was 4.5 percent.
The news may renew speculation in the financial sector over whether the U.S. economy is indeed in the grips of a recession.
“For the average American there is not debate that the economy is in a recession,” Mark Zandi, chief economist at Moody’s Economy.com, told the AP. “That’s because their net worth is lower, their purchasing power is lower and it is tough to find a job. If you lose a job, it is tough to get back in,” he said.
The surprisingly high jobless rate shocked financial markets early Friday, causing prices for U.S. Treasury bonds to rise as investors bet the weakened employment outlook pushed back any possibility of early interest-rate rises from the Federal Reserve.