The US economy created fewer jobs than expected last month with private firms still showing a reluctance to rehire laid-off Americans, official figures showed Friday.
In figures that fell well below expectations — sending markets across the world plummeting — the economy created 431,000 posts, most of them temporary government jobs for the 2010 census.
Private sector jobs rose by just 41,000.
The US unemployment rate dipped to 9.7 per cent from April’s 9.9 per cent, as large numbers of workers left the labour market.
Expectations had been high ahead of the publication of the report, which is a key indicator of the health of the US economy.
President Barack Obama’s hopes of slashing US unemployment had been expected to get a substantial boost, amid predictions that 5,00,000 or more jobs would be created.
But Friday’s figures did little to shake fears of a jobless recovery.
The Dow Jones Industrial Average, Wall Stree’s blue-chip barometer, was sharply lower in the first minutes of trade, falling over 160 points, or more than 1.5 per cent.
Obama earlier this week predicted a ‘strong’ jobs report as he mounted a campaign-style defence of his economic policies with an eye on mid-term elections this November.
Facing unemployment levels close to double digits, Obama’s bid to put the economy back on course has been hampered by a snail-like increase in private-sector hiring.
Business’ ability to shrink the ranks of unemployment is seen as key as the government gradually withdraws stimulus spending that has been propping up the economy.
But the rate of job growth is painfully slow for the White House and one in ten American workers who are unemployed and continue to stream into government offices asking for help.
The Labour Department says almost 4.7 million Americans now claim unemployment benefits, with 453,000 new claims in the last week of May alone.
Instead of rehiring staff, many firms are asking workers to put in longer hours or are creating only part time jobs, according to two sets of data also released on this week.
Business output per hour has increased over six per cent in the last year, which according to the New York Federal Reserve is the largest rise since the bursting of the dot-com bubble a decade ago.
Meanwhile, pollsters at Gallup reported that a fifth of the US work force was unemployed or worked fewer hours than desired.
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