Unemployment Rate Rises to 6.1% in May

Payrolls declined by 17,000 in May, the Labor Department said Friday, which was less than economists expected but enough to push the nation's unemployment rate to a nine-year high of 6.1%.

Since employment levels drive so much economic activity, an improvement in the job market can bolster consumer confidence and spending patterns, which affect trucking demand.

Manufacturers shed 53,000 jobs last month, the 34th straight decline. The manufacturing workweek rose to 40.2 hours from 40.1 in April and overtime increased to 4.1 hours from 4 hours.

Economists had expected total payrolls to fall by 30,000 last month following a previously reported decrease of 48,000 in April, Bloomberg reported. Labor revised the April report on Friday, saying that payrolls were unchanged for the month.

Despite the increase in unemployment, the pace of job cuts has slowed after 114,000 workers were fired in the first quarter.

Combined with a rise in the stock market, end of the war in Iraq and signing of the tax-cut bill, some analysts told Bloomberg the Federal Reserve might decide to leave interest rates unchanged when it meets later this month.

One reason for last month's increase in the unemployment rate was that more people resumed their job searches, but failed to find work, Labor said. Nearly 9 million people were unemployed in May.

July 1994 was the last time the jobless rate was at 6.1%.

May’s report showed that employment in service-producing industries, which include retailers, banks and government agencies, rose 12,000 after rising 55,000 in April. Average weekly hours worked for all employees held at 33.7 hours.

This report was the first with new job reclassifications designed to give greater emphasis to service industries that now comprise 85% of the economy, Labor said.

The government also phased in changes to how the survey information is gathered, switched the way it calculates seasonal adjustments, included Defense Department civilian employees in the payroll numbers and issued its yearly benchmark revisions derived from more complete information lifted from unemployment insurance tax filings.

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