Jobless rate falls unexpectedly

WASHINGTON -- The nation's unemployment rate unexpectedly fell in May for the first time in three months, to 5.8 percent. Economists cautioned the improvement probably would be temporary and new jobs still hard to find.

The Labor Department also reported Friday that companies added 41,000 new jobs last month after a revised level of 6,000 in April. That's the first time payrolls have increased in two consecutive months since March 2001, when last year's recession started.

"Ultimately it is jobs that matter, and here we see that the labor market continues to lag," said Joel L. Naroff, president and chief economist of Naroff Economic Advisors. "Payrolls are rising, but very slowly."

May's jobless rate fell 0.2 percentage points from a nearly eight-year high of 6 percent in April.

"I think it's a fluke," said Mark Zandi, chief economist at Economy.com. "We'll see higher unemployment before we'll see sustained lower unemployment."

The economy is emerging from the recession, but the job market has been unable to support the number of people looking for work, which has caused the unemployment rate to hover near 6.0 percent for months.

"I don't pay attention to the numbers, however," President Bush said at the World Pork Expo in Des Moines, Iowa. "If a person's looking for work and can't find work, I'm worried about it. And so long as there are people looking for work who can't find work, we're going to continue doing the right thing in Washington to stimulate job creation."

Economists say companies are worried about the recovery's staying power and are reluctant to hire back workers and crank up spending until they are convinced the turnaround is for real.

Against such a backdrop of sluggish job growth, economists predict the unemployment rate will climb as high as 6.5 percent this summer.

The report also showed that the number of people unemployed for 27 weeks or longer continued to rise last month by 142,000, to 1.6 million. Those long-term jobless comprised about 20 percent of total unemployment in May, almost double the level of a year earlier.