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US employment growth registers sharp slowdown in May

     Jobs fair in Los Angeles Despite the slowdown, it was the eighth consecutive month of positive jobs growth in the US 
    US employment growth slowed sharply in May, with only 54,000 net new jobs added during the month.
    Markets had expected a rise of 150,000. It follows a downwardly revised but still rapid 232,000 increase in April.
    Despite the slowdown, it was the eighth month in a row of positive employment growth,
    The unemployment rate also rose unexpectedly to 9.1%, from 9% a month earlier.
    The number of unemployed remained largely unchanged at 13.9 million, but the number of long-term unemployed - out of work for more than 26 weeks - rose by 361,000 to 6.2 million.
    Stock market jitters The private sector created 83,000 new jobs in the month, while local governments reduced their headcount for the the 22nd month in a row, by an unusually large 28,000.
    US unemployment rate
    "Job gains continued in professional and business services, health care, and mining," said the Bureau of Labor Statistics.
    Total employment in the US still remains nearly 5% below the pre-recession peak it registered nearly three-and-a-half years ago, in what has been the worst jobs recession since World War II.
    The employment and unemployment figures are collected using different methods.
    Stock markets fell sharply following the data release, with the FTSE 100 index falling 0.8% immediately following the announcement.
    The Dow Jones dropped 1.2% at the start of trading, before recovering during morning trading in New York.
    Foul weather, high energy prices and the earthquake in Japan are being blamed for the bad news on jobs. But it may be the broader picture that is most troubling.
    The manufacturing surge has failed to lead to significant new hiring and a property market that is still on its knees is dragging down growth.
    Unemployment had fallen steadily from December To April, but since then it has climbed. The country is not generating nearly enough jobs to soak up new entrants into the labour market, let alone re-engage the millions that lost their jobs in the recent severe recession.
    After two big economic stimuli and significant monetary intervention, the government's economic armoury is looking pretty bare. That leaves President Obama in a tough place. Jobs - or the lack of them - have overshadowed his time in office. Few get re-elected with jobs numbers like these.
    Recession fears
    The figures echo similarly disappointing US economic data released in the past week, including apparent slowdowns in the manufacturing sector and in consumer spending.
    It all points to a marked slowdown in the US economy during the second quarter of the year, according to Nigel Gault, chief US economist at IHS Global Insight.
    "[The jobs report] is weak across the board," he said. "We can't point to any one special factor and say that makes this an aberration."
    However, he remains upbeat about the outlook for the second half of the year: "We have seen some easing in commodity prices, gasoline prices are starting to come down, and the bad effects on vehicle production of the Japanese problems will start to unwind."
    But the figures may resurrect fears of a possible slide back into recession, analysts warn.
    And that prospect will fuel speculation that the US Federal Reserve may embark on a third round of "quantitative easing" - purchasing government bonds to pump more cash into the financial system - later this year.
    "Arguing about the merits of whether QE3 would be a good idea, is irresponsible right now," said Tod Schoenberger, managing director at Landcolt Trading in Delaware.
    "It would be proactive for the [Federal Reserve's monetary policy committee] to discuss and develop a strategy for implementing QE3, because it's painfully clear the United States is headed for a very messy second half of 2011."

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US employment growth registers sharp slowdown in May

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