US new jobs plunged in May; jobless rate up

The number of jobs generated by the US economy plunged in May and inflation continued to erode workers' incomes, deepening the challenge to the Obama administration, official figures showed Friday. The economy added just 54,000 net new jobs in May, only one-quarter of the February-April pace, while the unemployment rate edged up to 9.1 percent, the Labor Department said. The private sector, expected to drive the economy as governments slash spending, added a measly 83,000 positions, one-third of the rate of the previous three months. With downwardly-revised figures for employment in the previous two months, Friday's report confirmed the sharp slowdown in economic growth since the beginning of 2011, despite government efforts to power up a job-creating recovery. The bad numbers could in part be blamed on the impact on US manufacturers of Japan's March 11 earthquake-typhoon disaster, as well as the jump in oil prices, economists said. But they were likely to fuel the raging political battle over government spending and how to repair the economy while nearly 14 million people remained unemployed, more than a year after the country's deep recession ended. Underscoring the challenge to President Barack Obama as his campaign for reelection in 2012 gets underway, Republican House leader Eric Cantor blamed the White House's poor policies for the high jobless rate. "It is astounding that despite the warning signs and economic indicators, President Obama and congressional Democrats still have failed to offer any concrete plan to create jobs, reduce our debt, or grow our economy," he said in a statement. The chairman of the White House's council of economic advisers, Austan Goolsby, played down the report. "There are always bumps on the road to recovery, but the overall trajectory of the economy has improved dramatically over the past two years," he said. "The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision," he said. "Therefore, as the administration always stresses, it is important not to read too much into any one monthly report. Friday's numbers were poor all around. Hourly wages rose 0.3 percent, but were still being eaten away by higher prices: in the year to May, wages were up 1.8 percent, compared to an inflation rate of 3.1 percent. While the country generated a large number of jobs in the mining sector in May -- driven by jumps in oil and mineral prices -- the manufacturing sector, which had expanded solidly in the first part of the year, lost 5,000 jobs. Meanwhile, the public sector at all levels, from federal to local, cut 29,000 jobs. Some economists had forecast that tornado and flood disasters in the south and midwest would push employment figures down. But Labor Statistics Bureau commissioner Keith Hall said those were not an important factor. "While there is no question that some workers in the devastated communities may have been at least temporarily displaced from their jobs, we found no clear impact of the disasters on the national employment and unemployment data for May," he said in a statement. "Overall, this is horrible," said Ian Shepherdson, US economist for High Frequency economics. But he said it was likely a short-term dip. "We think it is largely a reaction -- an overreaction we would say -- to the rise in oil prices, and a very real hit to autos and tech from the Japan earthquake."