US adds 69K jobs in May, weakest in a year

US employers created only 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up, boding ill for President Barack Obama's re-election chances.

The dismal jobs data will fan fears that the economy is sputtering. And it could lead the Federal Reserve to take further steps to help the economy.

Republicans seeking the White House have accused Obama of failing to steer the economy out of a deep recession, setting up the health of the nation's economy as a pivotal issue in the 2012 election.

Mitt Romney, Obama's Republican challenger, said the jobs report is "devastating news" for workers and their families. In a statement, he called the report "dismal" and a harsh indictment of Obama's policies.

The Labor Department also said Friday that the economy created far fewer jobs in the previous two months than first thought. It revised those figures down to show 49,000 fewer jobs created. The unemployment rate rose to 8.2 percent from 8.1 percent in April, the first increase in 11 months.

The Dow Jones industrial average fell 200 points in morning trading.

The yield on the benchmark on the 10-year Treasury note plunged to 1.46 per cent, the lowest on record. It suggested that investors are flocking to the safety of US government bonds.

The price of gold, which was trading at about $1,550 an ounce before the report, shot up $30. Investors have seen gold as a safe place to put their money during turbulent economic times.

Josh Feinman, global chief economist with DB Advisors, said Friday's report raises the likelihood that the Federal Reserve will do more - perhaps start another round of bond purchases to further lower long-term interest rates.

Still, he noted that the rate on 10-year Treasury notes is already at a record low 1.46 percent.

"How much lower can long-term rates go?" Feinman said.

The economy is averaging just 73,000 jobs a month over the past two months - roughly a third of 226,000 jobs created per month in the January-March quarter.

Slower growth in the United States comes at a perilous time for the global economy.

Europe's financial crisis is flaring again. And nearly half the 17 countries in the eurozone are in recession. China, the world's second-largest economy, is also showing signs of weakness. Its manufacturing sector is decelerating, a reflection of lackluster demand for its products from Europe, the U.S. and the rest of the world.

But while China is acting to increase growth and European countries are weighing similar steps, US leaders have been focused more on reducing government debt.

Romney has made the economy the central theme of his campaign. No president since the Great Depression has sought re-election with unemployment as high as 8.2 per cent, and past incumbents have lost when the unemployment rate was on the rise.