In the largest single monthly increase since 1986, the unemployment rate for the nation jumped half a percentage point in May signalling that the economy is still troubled despite some recent steadying news in the financial sector:
The jobless rate for the month was 5.5 percent, up from 5 percent in April, the Labor Department said. That was the largest swing in a single month since 1986. The result stunned economists, who had expected the rate to rise only to 5.1 percent. The report also said the number of jobs on employers' payrolls fell by 49,000.
The data are new evidence that despite recent signs of stability in financial markets, the U.S. economy is still troubled. For most of the past two months, the stock market has been rising and some measure of normalcy has returned to world markets. Economic data have been weak but not horrible. Today's report, however, undermines a budding consensus that the economy is holding up.
The unemployment numbers, coupled with a steep increase in oil prices, rattled the stock market. The Dow Jones industrial average was down nearly 250 points, about 2 percent, shortly before noon.
According to the newest figures, 861,000 more people were unemployed, and the jobless level rose among almost all groups: men, women, teenagers, whites and blacks. Unemployment among Hispanics was unchanged, and it dropped slightly among Asians.
Part of the increase was due to the large number of teens who were looking for seasonal employment and failed to find it. More than 260,000 young people were included in these figures.
Construction and home building related manufacturing sectors were the hardest hit denoting the continuing softness in the housing market. But retail also lost jobs as did professional and business services.
At 5.5% unemployment is still at historic lows. But that is easier to say when unemployment is going down. When it is on its way up, it begins to worry ordinary people which contributes to a lack of confidence in the economy which may slow spending even further leading to more job losses.