Employers added less jobs; unemployment ticks up to 9.1 percent

(AP) - American employers hired only 54,000 newworkers in May, the fewest in eight months, and the unemploymentrate rose to 9.1 percent.The Labor Department report

WASHINGTON - (AP) - American employers hired only 54,000 newworkers in May, the fewest in eight months, and the unemploymentrate rose to 9.1 percent.

The Labor Department report offered startling evidence that theU.S. economy is slowing, hampered by high gas prices and naturaldisasters in Japan that have hurt U.S. manufacturers.

The pace of hiring has weakened dramatically from the previousthree months, when the economy added an average of 220,000 newjobs. Private companies hired only 83,000 new workers in May - thefewest in nearly a year.

Stock futures plunged after the report was released.

Local governments cut 28,000 jobs last month, the most sinceNovember. Nearly 18,000 of those jobs were in education.

Cities and counties have cut jobs for 22 straight months andhave shed 446,000 positions since September 2008.

The anemic pace of job creation presents a huge challenge toPresident Barack Obama's reelection prospects next year. And itfollowed a string of disappointing economic data in the past monththat suggest the economy is hitting a soft patch after a strongstart.

The manufacturing sector, a key driver of the economic recovery,grew at its slowest pace in 20 months in May. Home prices are stillfalling and reached their lowest level since 2002 in March.

Higher gas prices have left less money for consumers to spend onother purchases. And average wages aren't even keeping up withinflation. As a result, consumer spending, which fuels about 70percent of the economy, is growing sluggishly.

More people entered the work force in May. But most of the newentrants couldn't find work. That pushed the unemployment rate upfrom 9.0 percent in April. The number of unemployed rose to 13.9million.

And the government revised the previous months' job totals toshow 39,000 fewer jobs were created in March and April than firstthought.

The weakness in hiring was widespread. Manufacturers cut 5,000jobs, the first job loss in that sector in seven months. Thatincluded a drop of 3,400 jobs in the auto sector.

Car makers are cutting back on production because they arehaving a difficult time purchasing parts. Many auto parts aremanufactured in Japan and the March 11 earthquake in that countryhas disrupted supply chains.

Retailers cut 8,500 positions, after adding 64,000 in April. Andleisure and hospitality which includes restaurants and hotels, cut6,000 jobs. That came after they added an average of 43,000 in theprevious three months.

There were some bright spots in May. Professional and businessservices added 44,000 new positions, most of them in accounting,information technology services, and management.

Still, the economy needs to generate at least 100,000 jobs eachmonth just to keep up with population growth and prevent theunemployment rate from rising. And economists say the gains need tobe at least double that total to drive down the rate.

About 8.5 million Americans worked part time, even though theywould have preferred full-time jobs. Another 2.2 million havestopped looking in the past year. All told, the"under-employment" rate was 15.8 percent, down from 15.9 percentthe previous month.

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