US economy creates 175,000 jobs in May – too few to lower unemployment rate (+video)
The unemployment rate rose to 7.6 percent in May, up from 7.5 percent. As a result, it's unlikely that the Federal Reserve will taper off its monthly buying of securities, which has helped to buoy the housing market.
The US economy seems to be stuck in a rut: It’s growing, but not at a fast enough pace to make much of a dent in the unemployment rate.
In May, the economy added 175,000 new jobs, a moderate pace, but the unemployment rate rose to 7.6 percent from 7.5 percent, according to the Bureau of Labor Statistics.
Over the past three months, the economy has averaged a gain of 155,000 jobs – a rate that is far from the 200,000 a month that it needs to begin reducing the unemployment rate in a significant way.
“The economy is moving forward but going nowhere really fast,” says Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pa. “It’s frustrating.”
Economists say the less-than-dynamic job market probably means that the Federal Reserve is not likely to taper off its monthly buying of securities, which has helped to buoy the housing market. On Friday, the stock market rallied sharply as traders assessed the jobs numbers with the Fed in mind. The Dow Jones Industrial Average was up 170 points to 15210 by midday.
“The rising unemployment rate makes a huge difference to the Fed,” says John Silvia, chief economist at the Wells Fargo Economics Group in Charlotte, N.C. “The Fed is not going to be tapering anything off in June.”