skip to main content

Sluggish US economy sends mixed jobs signals

The US economy grew more slowly than first estimated in the first quarter, and disappointing jobs numbers suggested a sluggish second quarter.

With high unemployment and job creation at the top of US voters' minds, the latest figures cast a cloud over the economy a day ahead of the government's keenly anticipated May labour data.

The Commerce Department said that growth in GDP, a broad measure of the nation's goods and services output, was at an annual rate of 1.9% in the three months from January to March.

Its initial estimate last month was growth of 2.2%.

GDP growth in the world's largest economy hit 3% in the final quarter of 2011.

The slower pace in the first three months of the year was largely due to declines in private inventory investment and nonresidential fixed investment and a pick-up in imports, the Commerce Department said.

It was just below the 2% rate analysts expected and offered fresh evidence of the economy's struggle to gain traction almost three years after the Great Recession. The economy appears to be muddling through the second quarter amid mixed signals, particularly on high unemployment and the distressed housing market.

Separately, payrolls firm ADP said today that private-sector employment rose by 133,000 jobs in May from April's downwardly revised 113,000 number. Expectations were for a stronger rise of 157,000 jobs.

New claims for US unemployment benefits - a signal of the pace of layoffs - edged higher last week, suggesting efforts to bring down unemployment had stalled for more than a month, official data showed.

Initial jobless claims fell by 10,000 to 383,000 in the week ending May 26, the Labor Department said. That, and numbers over the previous month, pushed the four-week moving average of the figure higher to 374,500, after it declined three weeks in a row.

The weaker than expected jobs numbers came ahead of the Labor Department's May employment data, expected to show 150,000 jobs were added and an 8.1% unemployment rate, unchanged from April.

In April, the jobless rate fell from 8.2% in March due to workers dropping out of the labour force, while only a meagre 115,000 jobs were created, the lowest number in six months.