Employers eliminated the fewest jobs in eight months in May, strengthening signs that the recession is easing, while a drop in wage growth offered a warning the recovery may be muted.

Payrolls fell by 345,000, less than forecast, while the unemployment rate hit a 25-year high of 9.4 per cent, partly because more people joined the workforce to look for jobs, Labor Department figures showed. The annual rate of average hourly earnings growth touched its lowest since November 2005.

“The rate of decline has slowed some, but the losses to date are causing sharp declines in US per capita income,” David Malpass, an economist and president of Encima Global in New York, wrote in a note to clients. Malpass predicted a “slow recovery” from the deepest recession in half a century.

Some investors focused on the report’s relief from payroll losses that surpassed half a million in each of the previous six months. The dollar rallied, Treasury yields rose and some traders added to bets the Federal Reserve will raise interest rates this year. The head of the panel that dates US recessions warned it’s still “too early” to call an end to the slump.

Americans are spending less and saving more as home values fall and companies from American Express Co to General Motors Corp continue to cut workforces.

Imapct of GM, Chrysler bankruptcy

The bankruptcies of General Motors and Chrysler LLC may generate more job losses. AutoNation Inc, the largest US new- vehicle retailer, plans to close seven showrooms, while Visteon Corp, the former parts-making unit of Ford Motor Co, and chassis manufacturer Metaldyne Corp also filed for bankruptcy.

Builders cut 59,000 jobs and financial firms cut 30,000. Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 120,000 workers. Retail payrolls decreased by 17,500. Government payrolls fell by 7,000 after rising 92,000 in the prior month.

source: msn

Tags: bankruptcy, Economist, general motors, gm, job loss, Obaman, recession, recession ease, slow job loss

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