Weak US Jobs Figures for May Hit Markets

The Dow Jones was down 165 points, or 1.3%, in early trading, while the Dax in Frankfurt was down 2.9% and the Cac 40 in Paris was down 1.9%.

The US economy added 69,000 jobs in May, which was well below forecasts.

It was the smallest number of jobs created since May 2011. The jobless rate increased to 8.2% from 8.1% in April, the Labor Department said.

To make matters worse, the number of jobs added in March and April was revised down by 49,000.

There are five million fewer jobs in the US than there were when the recession began.

'Awful number'

Republican presidential candidate Mitt Romney said: "Today's weak jobs report is devastating news for American workers and American families."

He described the report as, "a harsh indictment of the president's handling of the economy".

Employment increased in the categories of healthcare, transport and storage, and wholesale trade, but declined in construction.

The number of people who had been unemployed for more than 27 weeks, who are classified as long-term unemployed, rose to 5.4 million in May from 5.1 million in April.

They account for 42.8% of the unemployed.

"It's an awful number," said Rick Meckler, president of Libertyview Capital Management in New Jersey.

"Not only is it awful in its numerical terms, it comes at a very skittish time in the markets because of the European crisis. A number like this brings concern about a global slowdown."

The participation rate, which shows the number of people employed as a proportion of the workforce, rose to 63.8% from 63.6%, reversing the decline seen in April.

Global problems

European stock markets and US stock market futures were already lower following more signs of weakness in the Chinese and eurozone economies.

New unemployment figures showed that the jobless rate in eurozone was 11% in April, unchanged from March, but still the highest since records began in 1995.

Also, an influential business survey for the eurozone suggested the pace of contraction in its manufacturing sector was increasing.

And a similar report in China showed activity in its biggest, mainly state-owned, factories hit the lowest point this year in May due to weak domestic demand.

Following the release of the US jobs figures the euro briefly fell below $1.23 to hit its lowest level since July 2010, before recovering to stand at $1.2355.

The final estimate for the US purchasing manager's index (PMI) for May suggested that the manufacturing sector was growing, but by less than it had done since February.

The PMI came in at 54.0, down from 56.0 in April. Any figure above 50 indicates growth.

Separate figures showed that there was a small rise in US consumer spending in April. It rose 0.3%, having gone up by a revised 0.2% in March.

Personal incomes grew by 0.2% in April, which was the smallest gain since November and suggests spending may be limited in the coming months.

Consumer spending accounts for about 70% of US economic activity.

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