US jobless rate may scale highest level in 25 years

WASHINGTON: Unemployment in the US probably surpassed 9% in May for the first time in more than 25 years, underscoring forecasts that the economy will be slow to pull out of the worst recession in half a century, economists said before a report this week.

The jobless rate climbed to 9.2%, the highest level since September 1983, according to the median estimate in a Bloomberg News survey ahead of the Labor Department���s June 5 report. Other data may show manufacturing and service industries shrank at a slower pace and consumer spending dropped. ���The economy is decaying at a slower rate and that is the best you can say,��� said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc in New York.

���I can���t tell you we are out of the woods yet.��� Economists forecast the jobless rate will head to almost 10% by the end of the year, depriving Americans of the income needed to propel spending and stoke a vigorous recovery . Access to credit will likely also be limited as record defaults and foreclosures make banks reluctant to lend. The unemployment rate is predicted to rise from 8.9% in April.

Payrolls probably fell by 521,000 this month after declining by 539,000 in April, the survey also showed. Job losses peaked at 741,000 in January , the most since 1949. The economy has lost 5.7 million jobs since the recession began in December 2007, the most of any economic slump in the post-World War II era.

Restructuring at automakers including General Motors Corp and Chrysler LLC may generate more job losses. AutoNation Inc, the largest US new-vehicle retailer, has said it will close seven showrooms in line with bankrupt Chrysler���s termination of 789 dealerships. Economists project the Labor report will show manufacturers cut payrolls by 150,000 in May, after slashing them by 149,000 in April.