Unemployment Rate Jumps to 5.5 Percent

The nation's unemployment rate jumped to 5.5 percent in May - the biggest monthly rise since 1986 - employers have cut 49,000 jobs.
The economy is struggling and in need of a boost because of the dwindling job opportunities and the high floreclosure rates.
The unemployment rate soared from 5 percent in April to 5.5 percent in May. That was the biggest one-month jump in the rate since February 1986. The increase left the jobless rate at its highest since October 2004. On Wall Street, stocks slid. The Dow Jones industrials tumbled more than 200 points in morning trading. The big jump in the unemployment rate surprised economists who were forecasting a tick-up to 5.1 percent. The 5.5 percent rate is relatively moderate judged by historical standards. Yet, there was no question that employers last month sharply cut jobs in manufacturing, construction, retailing and professional and businesses services. Those losses swamped gains elsewhere, including in the education and health fields, government, and leisure and hospitality.


That's because their net worth is lower, their purchasing power is lower and it is tough to find a job. If you lose a job, it is tough to get back in," he said. So far this year, the government said, job losses have totaled 324,000. Workers with jobs, however, saw modest gains. Average hourly earnings for jobholders rose to $17.94 in May, up 0.3 percent from the previous month. Economists were forecasting a 0.2 percent gain. Over the last 12 months, wages have grown by 3.5 percent.. With food and energy prices marching upward, paychecks aren't stretching as far. Although tax rebates helped to energize shoppers and give major retailers better sales in May, analysts still believe that anxious consumers will be keeping a close watch on their purchases and their budgets in the months ahead. A weakening job market could make people feel less inclined to spend, which would put a damper on overall economic growth. Worried about inflation, Federal Reserve Chairman Ben Bernanke has signaled that the central bank's rate-cutting campaign, which commenced last September to help bolster the economy, is probably over for now. Fed officials and the Bush administration are hoping that the Fed's powerful doses of rate reductions and the government's $168 billion stimulus package, including tax rebates for people and tax breaks for businesses, will pull the economy out of its deep funk in the second half of this year. Even if that happens, the unemployment rate is expected to climb to 6 percent or higher early next year. Employers won't want to ramp up hiring until they feel more sure that an economic recovery has strong legs.