RTTNews - Employment fell by much less than expected in the month of May, according to a report released by the Labor Department on Friday, although the unemployment rate rose more than expected to reach a new twenty-five year high.

The report showed that non-farm payroll employment fell by 345,000 jobs in May following a revised decrease of 504,000 jobs in April. Economists had expected a decrease of about 520,000 jobs compared to the loss of 539,000 jobs originally reported for the previous month.

While the manufacturing sector continued to experience steep job losses, losing 156,000 jobs in May, the report showed a moderation in the pace of job losses in construction and several service-providing industries.

An increase of 44,000 education and health service jobs also helped to limit the size of the drop in jobs. The leisure and hospitality industry also added 3,000 jobs.

At the same time, the Labor Department said that the unemployment rate jumped to 9.4 percent in May from 8.9 percent in April. With the increase, the unemployment rate came in above economist estimates of 9.2 percent and rose to its highest level since August of 1983.

The bigger than expected increase in the unemployment rate was partly due to an increase in the size of the labor force, which increased by 350,000 in May.

Since the start of the recession in December 2007, the number of unemployed persons has risen by 7.0 million and the unemployment rate has grown by 4.5 percentage points, the Labor Department said.

While employment data is generally seen as a lagging indicator of the strength of the economy, perceptions about the labor market can have a significant impact on consumer confidence.

The Labor Department released a separate report on Thursday showing that initial jobless claims fell to 621,000 in the week ended May 30th from the previous week's revised figure of 625,000.

The report also showed that continuing claims fell to 6.735 million in the week ended May 23rd from the preceding week's revised level of 6.750 million. The modest decrease broke a recent streak of record highs and marked the first decrease since the week ended January 3rd.

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