WASHINGTON The U.S. economy lost fewer jobs than expected in May, and the unemployment rate dropped to 4.4%, a 0.1% decline from April, suggesting that payroll cutbacks may be leveling off.
The job total fell 19,000 after declining a revised 182,000 in April, the Labor Department said Friday. However, the largest drop in factory employment in almost three years outweighed an increase in service-sector employment. Manufacturing is quite a bit worse off than we thought, but the rest of the economy is pulling some of the slack, said Vincent Boberski, chief economist at Dain Rauscher Investment Services in Chicago.
Factory employment fell 124,000 in May, the 10th straight monthly decline and the largest since a 173,000 plunge in July 1998, when General Motors Corp. workers went on strike. Companies such as Dell Computer Corp. have been cutting jobs to reduce costs as the economy slows.
Aprils unemployment rate of 4.5% was the highest since October 1998, as the number of people in the labor force declined by almost half a million.
Analysts had expected a May jobless rate of 4.6% and 50,000 fewer jobs after Aprils loss of 223,000 positions, according to a Bloomberg News survey.
Some members of the Federal Reserve Board have indicated they believe that the national economy may not be out of the woods just yet.
And in a speech Thursday, Dallas Fed President Robert McTeer said that the unemployment rate may rise further. It would be unusual for unemployment to go up as it has and suddenly stop, Mr. McTeer said in a speech at Texas Tech Universitys College of Business Administration. "I think it will go up a little bit more. I dont think well be able to stop at 4.5%."