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U.S. unemployment rate rises on dismal jobs report

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The U.S. economy suddenly looks a lot weaker.

U.S. employers created only 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up.

The dismal jobs data will fan fears that the economy is sputtering. It could also damage President Barack Obama's re-election prospects. And it could lead the Federal Reserve to take further steps to help the economy.

The Labor Department also said Friday that the economy created far fewer jobs in the previous two months than first thought. It revised those figures down to show 49,000 fewer jobs created. The unemployment rate rose to 8.2 percent, up from 8.1 percent in April, the first increase in 11 months.

Dow Jones industrial average futures, which were already down 100 points before the report, fell an additional 100 points within minutes of its release.

The yield on the benchmark on the 10-year Treasury note plunged to 1.46 percent, the lowest on record, suggesting investors are flocking to the safety of U.S. government bonds.

The price of gold, which was trading at about $1,550 an ounce before the report, shot up $30. For much of the past three years, investors have seen gold as a safe place to put their money during turbulent economic times.

Josh Feinman, global chief economist with DB Advisors, said the report raises the likelihood that the Federal Reserve will do more — perhaps start another round of bond purchases to further lower long-term interest rates.

Still, he noted that the rate on 10-year Treasury notes is already at a record low 1.46 percent.

"How much lower can long-term rates go?" Feinman said.

The economy is averaging just 73,000 jobs per month over the past two months — roughly a third of 226,000 jobs created per month in the January-March quarter.

Mitt Romney, Obama's Republican challenger, has made the economy the central theme of his campaign. No president since the Great Depression has sought re-election with unemployment as high as 8.2 percent, and past incumbents have lost when the unemployment rate was on the rise.

"Today's extremely troubling jobs report proves yet again that President Obama's policies simply are not working and that he has failed to live up to the promise of his presidency," said Republican National Committee Chairman Reince Priebus.

There are signs business confidence is waning. Companies have cut their spending on computers and machinery for two straight months, goods that signal investment plans. And some regional surveys suggest the factory activity is expanding at a slower pace.

Consumers are also more downbeat about the economy, according to a May survey from the Conference Board. That could lead more Americans to cut back on spending, which drives 70 percent of economic growth.

Construction firms cut 28,000 jobs, the steepest drop in two years. Professional services, government, hotels, restaurants and other leisure industries also lost jobs.

Not all industries cut jobs. Manufacturers added 12,000 jobs. Transportation and warehousing created nearly 36,000. Education and health care added

Businesses are facing a growing threat from Europe's financial crisis, which has worsened in recent weeks. The crisis is driving up borrowing costs for Spain and Italy and spreading to the banking system. Greece could be forced to exit the euro, which could push the region into a sharp recession. That could limit U.S. growth.

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  1. Those of you yelling to deport them all should at least understand that the law allows minors (if not from a bordering country) to argue for asylum. If you don't like the law, you can petition Congress to change it. But you can't blindly scream that they all need to be deported now, unless you want your government to just decide which laws to follow and which to ignore.

  2. 52,000 children in a country with a population of nearly 300 million is decimal dust or a nano-amount of people that can be easily absorbed. In addition, the flow of children from central American countries is decreasing. BL - the country can easily absorb these children while at the same time trying to discourage more children from coming. There is tension between economic concerns and the values of Judeo-Christian believers. But, I cannot see how the economic argument can stand up against the values of the believers, which most people in this country espouse (but perhaps don't practice). The Governor, who is an alleged religious man and a family man, seems to favor the economic argument; I do not see how his position is tenable under the circumstances. Yes, this is a complicated situation made worse by politics but....these are helpless children without parents and many want to simply "ship" them back to who knows where. Where are our Hoosier hearts? I thought the term Hoosier was synonymous with hospitable.

  3. Illegal aliens. Not undocumented workers (too young anyway). I note that this article never uses the word illegal and calls them immigrants. Being married to a naturalized citizen, these people are criminals and need to be deported as soon as humanly possible. The border needs to be closed NOW.

  4. Send them back NOW.

  5. deport now

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