Sharp Rise In Unemployment Rate In May
On Friday, the Labor Department released the May jobs report, the economy appears to be worsening as the unemployment rate jumped last month to 5.5%, up from 5%.
Among the unemployed, the number of reentrants and new entrants to the labor force rose in May, by 326,000 and 204,000, respectively. The number of persons who had lost their last job increased by 268,000 over the month to 4.3 million. Over the past 12 months, the number of unemployed job losers has risen by 907,000.
The number of newly unemployed–those jobless fewer than 5 weeks–rose by 760,000 to 3.2 million in May. The number of persons unemployed for 27 weeks or more increased by 197,000 to 1.6 million. This group accounted for 18.3 percent of the unemployed in May.
The economy lost an estimated 49,000 jobs, continuing of a five month losing streak which began in January. April job losses were also revised upwards to 28,000 from 20,000.
The sharp rise in unemployment was due to an increase in the number of people seeking jobs, mostly college students and recent graduates which finished school last month.
While there is a normal jump in job seekers during this time of year, economists were predicting the unemployment rate to only rise to 5.1%. The worse than expected report sent the stock market tumbling as the dollar weakened and the price of oil shot up to a new record high.
Up until now, economists were encouraged by the steady unemployment rate and the resiliency of the economy in the face of the credit crunch and housing slump. Despite the bleak jobs report, most analysts expect the Fed to keep interest rates at their current level at least until the fall.
