- The Washington Times - Friday, June 2, 2006

12:24 p.m.

Job growth faltered in May, with employers boosting payrolls by just 75,000. Yet the nation’s unemployment rate dipped to 4.6 percent, the lowest since summer 2001.

The latest snapshot, released by the Labor Department today, offers a mixed picture of the jobs climate. Wage growth, meanwhile, slowed, a development that should ease concerns about inflation getting out of hand.

The count of new jobs generated last month — 75,000 — was the smallest since October, when hiring practically stalled as companies were jolted by the fallout from Hurricanes Katrina and Rita. Job gains for March and April turned out to be weaker than previously reported.

On the other hand, the unemployment rate dropped a notch from 4.7 percent in April to 4.6 percent in May, the lowest since July 2001.

Taken together, economists said, the report provides fresh evidence that overall economic growth is moderating to a more sustainable pace that should held keep a lid on inflation. The new employment figures increase the likelihood that the Federal Reserve might leave interest rates alone in June, taking a pause in its two-year rate-raising campaign, analysts said.

“With payrolls on the soft side and the unemployment rate on the strong side, together they paint a picture of economic growth this is slowing but that is just about right to avoid accelerating inflation,” said Mark Zandi, chief economist at Moody’s Economy.com.

The payrolls figure and the unemployment rate come from two different statistical surveys, which can provide — as in today’s case — a somewhat conflicting picture of what is happening in the labor market.

The seasonally adjusted overall civilian unemployment rate — 4.6 percent in May — is based on a survey of 60,000 households. It shows that 288,000 people said they found employment last month, outpacing the number of people who couldn’t find work.

Economists tend to put more stock, however, in the much broader business survey of 400,000 work sites that is used to calculate the payroll figures.

In May, job cuts at factories, in retailing and in other fields tempered job gains in education and health care, financial activities and elsewhere.

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