WASHINGTON -- The nation's unemployment rate dipped slightly to 4.4 percent in May, the first improvement in eight months, even as manufacturing industries continued to lay off thousands of workers. Factory activity plunged for the 10th month in a row.
The Labor Department reported Friday that the overall jobless rate last month fell by 0.1 percentage point from the 4.5 percent it had reached in April. The April level was the highest in 2 1/2 years.
The National Association of Purchasing Management said its purchasing index fell in May to 42.1 from 43.2 in April. The May reading was lower than the 43.5 analysts had anticipated and suggested the economy continues to struggle.
An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction.
On Wall Street, stocks were mixed. After the first 45 minutes of trading, the Dow Jones industrial average was down 45 points and the Nasdaq index had gained 6 points.
The jobless decline in May was the first since September, when the unemployment number fell to a three-decade low of 3.9 percent. The jobless level has been on a steady rise since that time as businesses have intensified layoffs in the wake of a sharply slowing economy.
Businesses continued those job cutbacks in May, slashing payrolls by another 19,000 workers, following an even bigger reduction of 182,000 workers in April. The April decline in payroll jobs represented the biggest drop in a decade, since the country was struggling to pull out of recession.
The May report was stronger than had been expected. Many analysts were looking for the unemployment rate to rise to 4.6 percent and for businesses to cut as many as 50,000 jobs during the month instead of the actual 19,000 job reduction.
Paul Kasriel, chief economist at Northern Trust Co. in Chicago, cautioned against getting too optimistic with the slight improvement in the jobless rate, predicting it will resume rising in coming months until an economic rebound takes hold in the second half of the year.
He predicted the Federal Reserve will cut interest rates for a sixth time when it meets at the end of this month, but he said the rate cut may be just a quarter-point in contrast to the previous five reductions of a half-point each.
In a third report, the Commerce Department said construction spending went up in April for the sixth month in a row, rising 0.3 percent to a seasonally adjusted record annual rate of $855.2 billion.
An increase in spending on new houses and big government projects offset a drop in spending on commercial building, such as offices, industrial complexes and hotels.
Meanwhile, the May decline in payroll jobs would have been the third in a row but the government, as part of its annual benchmark revision of the figures, found more jobs were created than originally reported in the past 12 months.
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