US employers in May added the fewest number of workers in eight months and unemployment unexpectedly rose to 9.1 per cent, underscoring Federal Reserve concerns the expansion is failing to boost the labour market.

Payrolls increased by a less-than-projected 54,000 last month, after a revised 232,000 gain in April that was smaller than initially estimated, labour department figures showed yesterday.Payrolls increased by a less-than-projected 54,000 last month, after a revised 232,000 gain in April that was smaller than initially estimated, labour department figures showed yesterday.

The jobless rate climbed to the highest level this year from 9 per cent a month earlier.

The figures raise the odds Fed policymakers will hold interest rates close to zero into next year, said Julia Coronado, chief economist for North American at BNP Paribas in New York. “These are pretty bleak numbers,” Coronado said. “Some of the engines of hiring just went away. Combined with the slowdown in consumer spending, it raises concern that the slowing in hiring could be with us for a while.”

Factories cut payrolls in May for the first time in seven months, partly reflecting a drop at motor vehicles and parts producers that may have been related to the earthquake in Japan. Employment at retailers, leisure companies and state and local governments also fell during the month. – (Bloomberg)