US private employers hired fewer workers than expected in May, a setback for the labour market recovery, even as temporary census hiring pushed overall payrolls growth to its fastest pace in 10 years.
The Labor Department said today payrolls rose 431,000 as the government hired 411,000 workers to conduct the population count. That was the largest monthly increase since March 2000 and marked a fifth straight month of gains.
But private employment, a barometer of labour market strength, increased just 41,000 after rising 218,000 in April, as employers opted to increase hours rather than hire new workers. The average workweek rose to 34.2 hours from 34.1 hours in April.
Major US stocks indexes fell sharply in the opening minutes of trading, while Treasury debt prices rallied. The US dollar added to gains against the battered euro.
Payrolls data for March and April was revised to show 22,000 fewer jobs created than previously reported. May's hefty employment gain lowered the unemployment rate to 9.7 per cent from 9.9 per cent in April.
Analysts polled by Reuters had expected non-farm payrolls to rise 513,000 and private businesses to create 190,000 jobs. The jobless rate had been seen dipping to 9.8 per cent.
The economy has now grown for three straight quarters and the recovery from the worst recession since the Great Depression of the 1930s is broadening.
US president Barack Obama said the gain of 431,000 jobs in May is a sign the US economy is getting stronger, although there will still be ups and downs going forward.
"These numbers do mean that we are moving in the right direction," Mr Obama said."There are going to be some ups and downs," he said.
The jobless rate is a drag on Mr Obama's popularity and could cost the Democratic Party dearly in November's congressional elections, with voters in an anti-incumbent and anti-Washington mood.
"This shows the recovery continues but at a modest pace. Expectations going forward are going to be tempered," said Boris Schlossberg, director of research at GFT Forex in New York.
Unemployment will probably remain high through the year as the millions of people who lost their jobs during the recession seek work and those who had dropped out of the labour force resume their search. Workers are counted as unemployed only if they are actively looking for work.
Reuters