WASHINGTON - The nation's unemployment rate climbed to 6.1 percent in May, the highest level in nine years, as businesses cut 17,000 jobs in a weak economy struggling toward recovery.
The rate was up one-tenth of a percentage point from April, peaking at a level not seen since the country was emerging from the last recession, the Labor Department reported Friday.
July 1994 was the last time the jobless rate was at 6.1. It was higher only in April 1994, at 6.4 percent.
One reason for last month's increase was that more people resumed their job searches, but failed to find work. Nearly 9 million people were unemployed in May.
Payrolls fell by 17,000 in May following a revision in April, in which no jobs were lost. Those revisions are made annually, and the results showed that job losses were not nearly as steep as previously reported. The government also changed how it calculates payrolls data and expanded job categories.
The report was slightly better than what analysts had predicted - job losses of about 30,000.
"We've got a long way to go," said Ken Mayland, president of ClearView Economics. "But as they say, the longest journey begins with a first step. It looks like we've taken that first step."
Stock prices surged in early trading, pushing the Standard & Poor's 500 index above the 1,000 level for the first time in nearly a year and the Dow Jones industrials up by more than 160 points.
The rise reflected investors' growing expectations that the market has hit bottom and the economy is turning around.
Labor Secretary Elaine Chao said the jobless rate rise was disappointing.
"What's important to look at is what's going on behind these numbers," she said, noting there were some bright spots in the report.
Industries driving the job losses last month were manufacturing, transportation and government.
Some sectors did gain jobs in May. Employment rose in construction and in service jobs, including education and health services.
Another positive sign in the report was the hiring increase of 58,000 at temporary employment firms. Economists closely watch that industry because it can signal if companies may begin to hire permanent, full-time workers.
But even if the economy improves later this year, as economists hope, the jobless rate still is expected to climb to as high as 6.5 percent.
Job growth probably won't be strong enough to accommodate all the additional job seekers who would resume their searches, attracted by an improved climate. That would contribute to a rise in the unemployment rate, which happened last month.
Federal Reserve Chairman Alan Greenspan has called recent reports on the nation's employment situation weak.
The sluggish job market so far hasn't caused consumers to shut their pocketbooks and wallets. They are the main force keeping the economy going, but they are being more selective.
Low interest rates have fueled a mortgage refinancing boom that has given people extra cash and solid home values. Those low rates also have generated continuous hiring in the construction industry.
The Fed has left a key short-term interest rate at a 41-year low of 1.25 percent since November. Greenspan has said rates are low enough to support economic activity, but he also has left the door open to later reductions.
Many economists think the odds are growing that the Fed will lower short-term rates at its next meeting starting June 24.
Cautious companies, wanting their profits to heal more, have been wary of making big investments in capital spending and in hiring, major forces restraining the economy.
May's report showed that the average time for people to be out of work was 19.2 weeks. People out of work 27 weeks or longer grew slightly by 300,000 to 1.9 million.