June 1 (Bloomberg) -- American employers in May added the fewest workers in a year and the unemployment rate unexpectedly increased as job-seekers re-entered the workforce, further evidence that the labor-market recovery is stalling.
Payrolls climbed by 69,000 last month, less than the most- pessimistic forecast in a Bloomberg News survey, after a revised 77,000 gain in April that was smaller than initially estimated, Labor Department figures showed today in Washington. The median estimate called for a 150,000 May advance. The jobless rate rose to 8.2 percent from 8.1 percent, while hours worked declined.
Stock-index futures and Treasury yields plunged as the figures showed a looming recession in the euro area and slower growth in China and Brazil are taking a toll on the U.S. Bigger job and wage gains are needed to jumpstart a self-sustaining increase in hiring and consumer spending.
“The labor market is clearly deteriorating,” Hugh Johnson, chairman and chief investment officer at Albany, New York-based Hugh Johnson Advisors LLC, whose payrolls projection of 75,000 was the closest to the May reading among economists surveyed by Bloomberg. “Confidence in the economy is declining. Businesses are extremely reluctant to add workers when there’s so much uncertainty.”
The contract on the Standard & Poor’s 500 Index expiring this month slumped 1.7 percent to 1,286.7 at 9:08 a.m. in New York. The yield on the benchmark 10-year Treasury note dropped to 1.47 percent from 1.56 percent late yesterday.
Estimates of the 87 economists surveyed ranged from increases of 75,000 to 195,000 after a previously reported 115,000 rise in April. Revisions subtracted a total of 49,000 jobs to payrolls in March and April.
The figures follow data earlier today showing the global economy is struggling as Europe’s sovereign-debt crisis roils financial markets. A measure of manufacturing in the 17-nation euro fell to a three-year low, while measures of the industry in China, India, South Korea and Taiwan also weakened.
The jobs data also come five months before Americans head to the polls to either re-elect President Barack Obama or choose presumptive Republican nominee Mitt Romney, who has said White House policies have prevented a stronger economic recovery.
The unemployment rate was forecast to hold at 8.1 percent, according to the survey median. Estimates in the Bloomberg survey ranged from 8 percent to 8.2 percent. Unemployment has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.