Contraction in economy less than feared, US commerce department says.
US stocks rose slightly in early morning trading after hopes the slowing in job losses pointed to a turnaround in the economy, with the Dow Jones Industrial Average rising 30.93 points, or 0.4 per cent, to 8,781.17 points in the first hour of trading.
Commenting on the news, Christina Romer, a White House economic adviser, told Bloomberg Television on Friday that the unemployment rate would stay high for a while.
“Even as we see things start to stabilise and hopefully grow again, we do know that unemployment tends to lag, and so that the unemployment rate is going to be high and probably stay high for a while, precisely because that is sort of the normal pattern as we come out of recession,” Romer said.
Most jobs lost in May were from factories, with 156,000 jobs cut – slightly up from the 154,000 jobs cut in April, while construction companies cut 59,000 jobs, down from 108,000 in April.
Education, healthcare, leisure and hospitality were among the industries adding jobs in May.
However, even with layoffs slowing, companies remain reluctant to hire until they feel certain that economic conditions are improving and that any projected economic recovery will last.
As the US recession continues, firms have turned to layoffs and other cost-cutting measures to survive the fallout, including keeping workers’ hours low and freezing or cutting pay.