The U.S. jobless rate unexpectedly declined to 5.8 percent in May and the economy added jobs for a second straight month, government figures showed.
Unemployment fell from a 7 1/2-year high of 6 percent in April, the Labor Department said. Payrolls rose by 41,000 after increasing by 6,000 in April. It marked the first back-to-back gains since the start of the recession in March of last year, while more companies added workers than cut jobs for the first time since then.
Service companies, such as home-improvement retailer Home Depot Inc., added workers for a third straight month and job cuts at manufacturers were the smallest since November 2000. The statistics suggest the labor market is starting to improve as the economic recovery deepens.
``It's slow but it's still an improvement,'' said Robert McGee, chief strategist at UFJ Bank in New York. ``We seem to have gotten past the worst adjustments in the labor market and to be on a path to recovery.''
Economists had projected the unemployment rate would rise to 6.1 percent
Instead of hiring more workers, factories boosted overtime to 4.3 hours in May from 4.2 hours. May's level of overtime was the highest since November 2000. For all of last year, manufacturing lost 1.31 million jobs.
``You're seeing a sharper turn in profits now than you saw in the recovery of 1991 and 1992, and that will boost the labor market a little bit sooner,'' said Paul Kasriel, chief economist at Northern Trust Corp. in Chicago, before the report.
Federal Reserve policy makers are still expected to refrain from raising interest rates for a couple more months to ensure the economy recovers
The U.S. economy grew at a 5.6 percent annual rate in the first quarter, the fastest in almost two years, and is expected to grow at a 3.1 percent pace this quarter, bloomberg
