U.S. Economy: Payrolls Fall, Unemployment Rate Climbs (Shobana Chandra)

June 6 (Bloomberg) -- The U.S. lost jobs for a fifth month and the unemployment rate rose by the most in more than two decades, as an influx of students into the workforce drove the biggest jump in teenage joblessness since at least 1948.

Payrolls fell by 49,000 in May, the Labor Department said today in Washington. The jobless rate increased by half a point to 5.5 percent, higher than every forecast in a Bloomberg News survey. The surge in youth unemployment exacerbated losses in every category except Hispanics

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Factories, builders and retailers axed workers last month; UAL Corp.'s United Airlines, truck-engine maker Cummins Inc. and bookseller Borders Group Inc. are among those announcing cuts this week as businesses try to survive the slowdown. Treasuries rose while stocks and the dollar slid after the report.

``This is an ugly report on the labor market,'' said Allen Sinai, chief economist at Decision Economics Inc. in New York. ``Most of the economy looks in recession.''

Ten-year Treasury yields dropped to 3.94 percent at 12:20 p.m. in New York, from 4.04 percent late yesterday. The Standard & Poor's 500 stock index fell 1.7 percent to 1,379.36.

Revisions subtracted 15,000 from payroll figures previously reported for March and April.

Economists had projected payrolls would drop by 60,000 after a previously reported 20,000 decline the prior month, according to the median of 79 forecasts in a Bloomberg News survey. The jobless rate was forecast to rise to 5.1 percent.

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