U.S. employers increased hiring in May, but job creation remains below the stronger pace seen during the winter and autumn, the government reported Friday, signaling that the economy was growing modestly but not robustly enough for the Federal Reserve (Fed) to reduce the amount of cash it is injecting into the banking system. The Labor Department said 175,000 net jobs were created last month, slightly above economist expectations of 170,000. The national unemployment rate rose to 7.6 percent from 7.5 percent in April, but the increase was a result of more people starting looking for work, a good sign. Despite the better-than-expected performance in May, it was the third consecutive month that job creation was less than 200,000. Specifically, employers have added an average of 155,000 jobs in the past three months, below the average of 237,000 created from November through February. The trend could increase concerns that government austerity this year is limiting the economy. There were signs in the May report that sharp federal spending cuts, higher pension taxes, and weaker global growth are affecting the job market. Manufacturers cut 8,000 jobs, and the federal government cut 14,000. Both were the third consecutive month of cuts for those sectors. Steady but lower job creation in recent months also might mean the Fed will maintain its pace of bond purchases. The central bank has said it will maintain its $85 billion in monthly purchases of bonds until the job market improves substantially. About 4.4 million Americans have been unemployed for more than six months, about 3 million more than pre-recession levels. The longer workers don't have a job, the greater the risk they become virtually unemployable, which could cause lasting damage to the economy.
