Jobless Rate Spikes Up to 5.5%, Highest Rate In 3 1/2 Years

Not good. But...

The U.S. unemployment rate jumped by the most in 22 years in May, reaching its highest level in more than 3-1/2 years and underscoring the recessionary risk the economy still faces.

The jobless rate rose to 5.5 percent last month from 5 percent, its highest level since October 2004, the Labor Department said on Friday. Some 49,000 jobs were cut from payrolls in May, the fifth straight month of job losses.

Wall Street economists surveyed by Reuters forecast that 58,000 jobs would be lost in May, but had foreseen the unemployment rate rising only to 5.1 percent. So far in 2008, job losses have totaled 324,000, the department said.

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The unemployment rate and the number of jobs added or lost each month are based on separate surveys, so it is possible for the rate to rise disproportionately to the amount of jobs lost.

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The jump in the jobless rate reflected, in part, a surge of workers entering the work force.

The number of people in the work force climbed by 577,000 in May, up sharply from an increase of 173,000 in April. Department officials noted that in the period from April through July, there typically is an increase in the number of young people seeking temporary work when school is out.

Analysts said the higher unemployment rate was likely to further sap consumer optimism.

5.5% still isn't a high unemployment number, but certainly the trend is worrisome. But, the question is whether most of the bad news is already baked in the cake or if there's more to come. Given that most indicators are up -- or just a bit down -- it's likely this is the worst of the Recession That Wasn't.

I won't quibble about the strange numbers, I guess. Beyond my ken. It does seem strange that such an outsized number of people joined the work force in one month.

posted by Ace at 01:04 PM

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