WASHINGTON, June 3, (Agencies): The US economy may be in for a prolonged period of soft growth as employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1 percent.
Nonfarm payrolls increased 54,000 last month, the Labor Department said, fewer than the most pessimistic forecast in the Reuters survey and just over a third of what economists had expected.
The employment report which showed broad weakness confirmed the loss of momentum in the economy already flagged by other data from consumer spending to manufacturing, and stoked fears the economy could be facing a more troubling stretch of weakness than had been thought.
“There are plenty of reasons to expect the third quarter will be better. But the question is now becoming how much better?,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts.
Economists had pinned the economy’s sluggishness largely on high energy prices, supply chain disruptions stemming from Japan’s earthquake and tornadoes and flooding in the US  Midwest and South. The department said it found “no clear impact” from weather on the jobs figures. 
The private sector, which has shouldered the burden of job creation added just 83,000 jobs, the least since last June, while government payrolls dropped 29,000. 
Adding to the gloomy labor market picture, about 39,000 fewer jobs were created in March and April than previously estimated.
“There was very little in the report that suggested the household sector has any reason to become more confident in the recovery and that in itself does not augur well for a future acceleration,” said Patrick O’Keefe, head of economic research at J.H. Cohn in Roseland, New Jersey.
Payrolls had been expected to rise 150,000, with private employment gaining 175,000. The employment report provides one of the best early reads on the health of the US economy and it sets the tone for global financial markets. 
US stocks traded lower, while Treasury debt prices added to earlier gains and interest rate futures rose, signaling that traders believe mounting signs of economic weakness will lead the Federal Reserve to maintain an ultra-easy monetary policy. 
The dollar fell against the yen and Swiss franc. The sharp slowdown in job creation is troubling news for President Barack Obama, whose chances of re-election next year could hinge on the health of the economy.
Economists said the report did not suggest the economy was heading into recession, but they said job growth could prove frustratingly slow.
“The recovery has not been aborted. The economy is not falling into a double-dip,” said Sung Won Sohn, an economics professor at California State University in the Channel Islands.
“The supply chain related to the aftermath of the tsunami is returning to more or less normal. The price of crude oil has fallen, lowering the burden on consumers and businesses.”
The optimistic view was captured in a separate report showing growth in the country’s services sector picked up in May. The Institute for Supply Management’s services sector index rose to 54.6 last month from 52.8 in April. 
The employment data lent more fuel to talk about the need for the Fed to extend its asset purchasing program when it expires this month, but officials at the central bank have set a high bar for any further easing of monetary policy. 
Meanwhile, the White House on Friday ruled out anxiety over the possibility of a “double dip” recession after disappointing jobs numbers augmented previous data suggesting the recovery may be slowing.
“Not at all,” said White House deputy press secretary Josh Earnest when asked whether President Barack Obama was concerned about a possibility of a return to economic contraction or a “double dip” recession.
“If you look at the overall trajectory of our economy there is a lot of cause for optimism,” said Earnest aboard Air Force One as Obama flew to Ohio to tout the success of his auto industry bailout.
“In just the last six months we are looking at about a million private sector private sector jobs created, the average over the last four months is 200,000 private sector jobs created.
“There are a lot of economic indicators that are out there — what we are looking at — it is not just the one month numbers, regardless of what those numbers are. We are looking at the trend.”