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The labor market of the world's largest economy softened dramatically in the current second quarter. -AP File Photo

WASHINGTON: The United States added a scant 69,000 jobs in May and the jobless rate rose to 8.2 per cent, the government said Friday in a dismal report spelling trouble for President Barack Obama's reelection bid.

The dramatically weak numbers signaled that the much hoped-for recovery in the job market has stalled and fueled speculation that it may prompt the Federal Reserve to step in with a fresh round of economic stimulus.

The May jobs increase was the smallest since May 2011, when the nation added 54,000 jobs. It was the first time the unemployment rate has climbed since June 2011.

The Labor Department's closely watched workforce figures were well below expectations of an increase of 150,000 jobs and the jobless rate remaining unchanged from April's 8.1 per cent.

“Today's US employment report for May was bad,” said Jason Schenker at Prestige Economics. “Financial markets are likely to remain very concerned about a slowing pace of job creation.”US stocks sank on the news, the S&P 500 index losing 1.5 percent in the first half hour of trade.

Total private-sector jobs rose by 82,000, offset by a decline of 13,000 in the public sector as government continues to rein in spending amid the slow economy.

Jobs were gained in health care and transportation and to a lesser extent, manufacturing.

But the embattled construction sector, still reeling from the collapse of a housing price bubble six years ago, shed another 28,000 jobs.

The Labor Department also slashed its estimate of April job gains by 33 per cent, to 77,000, and lowered its March estimate to 143,000.

The labor market of the world's largest economy softened dramatically in the current second quarter. In the first quarter, the average job gain was 226,000. In April and May, the average fell to 73,000.

Last month's jobless rate uptick was in part driven by a 0.2 per cent rise in the participation rate as people joined or rejoined the labor force. The department said the workforce increased by 642,000 from April.

The number of unemployed rose by 220,000, to 12.7 million.

“The hiring environment appears to have weakened, and anxiety about the outlook seems to have led many employers to put hiring plans on hold,” said Jeffrey Greenberg at Nomura Securities.

Greenberg said he expected the data could push the Federal Reserve's policy-setting committee to launch fresh stimulus measures in its June meeting.

“Today's report clearly raises the probability that the FOMC will decide to provide further accommodation,” he said.


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