Unemployment Rises by Half Percent to 5.5%

May payrolls fell 49,000 and the unemployment rate rose to 5.5 percent due to losses in the following cyclically sensitive sectors: construction, manufacturing, retail trade, and temporary help services. Healthcare continued to add jobs. It is the highest unemployment rate since October 2004 and the sharpest rise in unemployment in 22 years.

The most notable fact was the massive increase in household unemployment which rose 861,000 in the month of May, the largest increase in 33 years. This was due to new entrants to the labor force (recent high school and college graduates) as well as workers who lost their jobs.

Snapshot asks, since the Fed is typically very sensitive to unemployment, how will they balance May's unemployment data with inflation risks?

Bureau of Labor Statistics - Employment Situation Summary
Wall Street Journal - Unemployment Rate Jumps to 5.5% As Economy Continues to Shed Jobs
Wachovia - US Unemployment Jumps
Brookings - What the Unemployment Rate Signals on the Economy
BNP Paribas - US: Big Jump in UR to 5.5%