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The Honolulu Advertiser
Posted on: Saturday, June 3, 2006

Economy adds meager 75,000 jobs during May

By Jeannine Aversa
Associated Press

WASHINGTON — Cautious employers added just 75,000 new jobs in May, the fewest in seven months, in a fresh sign the national economy is losing momentum heading into summer.

Rising energy prices, higher borrowing costs and a cooling of the once red-hot housing market are the main forces shaping the slowdown in the country's overall economic activity. Those factors, along with sagging consumer confidence, are making companies wary of bulking up their payrolls, analysts said.

Taking a bit of the sting out of the sluggish job creation was the nation's unemployment rate , which dipped to 4.6 percent, the lowest in nearly 5 years.

Still, when the Labor Department's employment snapshot, released yesterday, is viewed as a whole, it points to slower — not faster — economic speed ahead, analysts said. Wage growth also slowed, a development that comforted economists who worry about inflation taking off.

"The May employment report was weak in almost all dimensions," said Nigel Gault, economist at Global Insight.

Manufacturers, retailers, home builders, trucking firms, hotels and motels were among those shedding jobs last month.

The Dow Jones industrials lost 12.41 points as investors wondered whether the economy was moderating too quickly.

On a brighter note, the unemployment rate dropped from 4.7 percent in April to 4.6 percent in May, the lowest since July 2001.

Some economists said the employment report boosts the odds that the Fed will leave rates alone at its next meeting, June 28-29. Others still predict another rate increase. A report on consumer prices, a closely watched inflation gauge, will be issued on June 14.