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Jobs numbers for May squelch some economic optimism

Private sector businesses added just 41,000 new jobs in May, leading Republicans to criticize Obama's economic plan. But analysts see a few bright spots.

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Temporary US Census employees assemble after a training course April 29 in New York. Census hiring accounted for most of the new jobs in May, according to the latest jobs numbers.

Bebeto Matthews/AP

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Other than a raft of temporary Census Bureau jobs, employers showed little enthusiasm to add to their payrolls last month.

On Friday, in a disappointing report, the Bureau of Labor Statistics said the economy gained 431,000 jobs and the unemployment rate slipped to 9.7 percent, down from 9.9 percent in April. The unemployment rate fell because there were fewer people looking for work, not because there was a jump in employment – private sector businesses added only 41,000 jobs last month, far fewer than economists had expected.

The May jobs numbers may have deeper ramifications. They confirm to the Federal Reserve that the economic recovery remains fragile, prompting some economists to speculate that the Fed will not raise interest rates for the rest of the year. In addition, May's numbers might give impetus to a new fiscal stimulus bill working its way through Congress. And investors may have further doubts about the strength of the economic recovery, a fear that weighed on the stock market Friday morning which slumped after the jobs report came out. At 11 a.m., the Dow Jones Industrial Average was down 184 points.

“This report quells the most optimistic views on the job market – business is still very cautious, they have not gotten their groove back,” says Mark Zandi, chief economist at Moody’s Economy.com.

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