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Jobless Rate at 56% (Update3) June 4 (Bloomberg) -- US employers added 248,000 workers to payrolls in May, more than forecast, helped by the biggest gain in manufacturing employment in almost six years. The economy has now recouped all the jobs lost since the recession ended in November 2001. The increase follows revised gains of 346,000 jobs in April and 353,000 in March that were larger than estimated last month, the Labor Department said in Washington. Manufacturing employment rose the most since August 1998 and hours worked at factories were the highest since October 2000. Business confidence is pretty high given the amount of hiring we are seeing,'' said Henry Willmore, chief US economist at Barclays Capital Inc. Rising wages will keep consumers spending and ensure the economy continues to expand for the rest of the year, economists said. Last month's gain underscores expectations Federal Reserve policy makers will raise the benchmark interest rate target by a quarter percentage point when they meet June 29-30. At 1 percent, the overnight bank lending rate is the lowest in 46 years. Fed Move Certain' A 25 basis-point increase this month is pretty much a certainty at this point,'' said Cary Leahey, a senior economist at Deutsche Bank Securities in New York, before the report. The 4 3/4 percent note maturing in May 2014 rose about 1/8, pushing down its yield 2 basis points to 469 percent at 9 am in New York. Dow Jones Industrial Average futures added 78 to 10,263 and Nasdaq-100 Index futures increased 18 to 1461. Revisions to April and March boosted payrolls by an additional 74,000. The increase of 947,000 jobs during the past three months was the most for any comparable period since March- May 2000. The floodgates have opened,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. They projected the unemployment rate would hold at 56 percent. Tug of War' The economy has created 12 million jobs so far this year. Employment gains have yet to help President George W Bush blunt criticism about his handling of the economy as concerns mount about record gasoline costs and the war in Iraq. You have a tug of war between higher oil prices and employment,'' said Leahey, a senior economist at Deutsche Bank Securities in New York, before the report. Polls last week showed Bush's job approval ratings dropped to the lowest of his presidency as a majority disapproved of the way he was handling economic policy. We do not pick up on our data that the American public is perceiving that the economy is getting better,'' said Frank Newport, editor-in-chief of the Gallup Poll, in an interview yesterday. The prospects of inflation and the gas prices are a big negative. Manufacturers added 32,000 jobs last month, the most since a 143,000 jump in August 1998 and the fourth straight increase. The manufacturing workweek rose to 411 hours from 407 in April. Overtime rose by six minutes to 47 hours, the most since July 2000. Average weekly hours worked for all employees held at 338 hours in May for a fifth month. Workers' average hourly earnings rose 03 percent, or 5 cents, matching the previous month's rise. Economists had expected a 02 percent increase in hourly wages. Services Employment in service-producing industries, which include retailers, banks and government agencies, increased 176,000 last month after rising 294,000 in April. The increase, was led by a 64,000 rise in professional and business services jobs, such as those at temporary help agencies. Construction employment increased 37,000 in May after a 19,000 increase. Payrolls rose 44,000 at education and health services after a 39,000 rise. CEO Forecast Twice as many chief executives said their companies would hire workers in the next six months than said they would eliminate staff, according to the results of a quarterly survey issued Wednesday by the Business Roundtable, a 150-member association of business leaders. Of the 116 executives polled, 38 percent predicted hiring would rise while 19 percent expected to cut jobs. We waited as long as we could to start hiring again, just to make sure it was sustainable, but the backlog of orders was growing significantly,'' said Fred Ouweleen, president of Pacific Miniatures, a Fullerton, California-based maker of airplane models for commercial carriers. The company has added 16 percent more workers to its payrolls in the last six months. The Plymouth, Minnesota-based company had a 21 percent increase in revenue in the first quarter compared with a year earlier. The price of crude oil rose to a record this week amid heightened concerns that terrorism would disrupt Middle East supplies. Consumer Spending A gain of 100,000 jobs a month would be enough to neutralize the effects of rising oil prices, higher interest rates and the loss of cash from less refinancing, said Deutsche Securities' Leahey. Economists at Deutsche Securities project payroll gains will surpass 200,000 a month on average for the rest of the year. Incomes rose 57 percent in the 12 months ended in April, the biggest year-over- year increase since December 2000, the Commerce Department reported last week. Consumer spending, which accounts for 70 percent of the economy, is likely to expand at a 42 percent annual pace this quarter after growing 39 percent in the first three months of the year, according to a forecast by James O'Sullivan and other economists at UBS Securities LLC in Stamford, Connecticut. The increase will propel the economy to a 45 percent annualized rate of growth this quarter compared with 44 percent in the previous three months, according to the forecast. The economy is projected to grow 46 percent this year, the most since 1984, led by consumer and business spending, according to economists surveyed this month by Bloomberg News. Among blacks, the unemployment rate rose to 99 percent from 97 percent in April. The jobless rate for Hispanics decreased to 7 percent from 72 percent and for whites rose to 5 percent from 49 percent. For teenagers, unemployment rose to 172 percent last month from 169 percent. The jobless rate for women fell to 48 percent from 5 percent. The jobless rate for men increased to 52 percent from 5 percent.
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