INSTANT VIEW: Jobless rate surges in May to 5.5 pct

NEW YORK (Reuters) - U.S. employers shed jobs for a fifth straight month in May and the unemployment rate jumped to its highest in more than 3-1/2 years, partly because more people were trying to come back into the workforce, a Labor Department report on Friday showed.

KEY POINTS: * The unemployment rate rose to 5.5 percent last month from 5 percent, its highest level since October 2004. Some 49,000 jobs were cut from payrolls in May, up from a revised 28,000 that were lost in April. * Wall Street economists surveyed by Reuters forecast that 58,000 jobs would be lost in May but had foreseen the unemployment rate rising only to 5.1 percent. So far in 2008, job losses have totaled 324,000, the department said. * The number of people in the workforce climbed by 577,000 in May, up sharply from an increase of 173,000 in April. Department officials noted that in the period from April through July, there typically is an increase in the numbers of young people seeking temporary work when school is out. * There were substantial job losses in May in construction industries where 34,000 cuts were made, in manufacturing where 26,000 jobs were lost, and among providers of professional services where 39,000 jobs were lost.

COMMENTS:

TOM SOWANICK, CHIEF INVESTMENT OFFICER, CLEARBROOK

FINANCIAL LLC, PRINCETON, NEW JERSEY:

"Jobs data was horrible but also inflationary with hourly earnings rising much more than expected. The dollar has become toast versus the euro, as the European Central Bank focuses on inflation and the Federal Reserve seems willing to risk a run on the dollar and inflation because of uncertainty with respect to financial markets and uncertainty with respect to the direction of the economy."

MICHAEL MORAN, CHIEF ECONOMIST, DAIWA SECURITIES AMERICA,

NEW YORK:

"It was not a half-bad report except for the unemployment rate which clearly makes it a soft report. Most of the increase in unemployment was from workers entering the labor force and a lot of those workers were young workers, probably people getting out of school and not finding jobs right away. But that's still an indication of a soft economy.

"The payroll number was close to expectations. It suggested a soft labor market, but not one that is alarmingly soft. The decline was about in line with the average of the past several months and the sources of weakness are the same that we've seen in other recent months: construction, manufacturing and retail trade. Business services has also started to soften in recent months."

OWEN FITZPATRICK, HEAD OF U.S. EQUITY GROUP, DEUTSCHE BANK

PRIVATE WEALTH MANAGEMENT, NEW YORK:

"The data definitely points to the fact that this economy is struggling to grow. We're seeing that from bottom up standpoint in terms of layoffs when you look at what the airlines have announced over the last couple of weeks.

"We're not going to have the normal type of economic recovery that we normally see when the Federal Reserve is aggressively cutting interest rates, when you get trend line economic growth of well over 2, over 3 percent.

"In our view the economy is just going to muddle along and see very anemic type of growth, not only for the balance of this year but also in 2009.

"We're going to see less than 2 percent growth in 2009 and that type of growth rate is going to result in some dislocation on the employment side. It's one reason to be cautious here. The positives is that valuations are reasonable, and I think corporations in general are in great shape from a balance sheet standpoint.