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May job growth is seen seen as a rebound sign

Unemployment rate holds steady at 4.5 percent

WASHINGTON -- If you're thinking about looking for a job, this might be the time to polish your resume.

The news is good if your field is health care, education, accounting, engineering, Internet-related activities, banking, food services, or government.

But be cautious about looking in manufacturing or retailing, which cut positions last month. Construction jobs were flat. Those pockets of weakness mostly reflected problems related to the troubled housing and automotive industries.

All told, the employment picture provided by the Labor Department yesterday showed job creation bounced back, with payrolls growing by 157,000 last month. That was an improvement over the 80,000 new jobs generated in April, the fewest in 2 1/2 years.

The overall unemployment rate held steady at 4.5 percent, low by historical standards.

"I think for job seekers the climate is pretty good right now but it does vary," observed Mark Vitner, economist at Wachovia. "But I think companies are looking at each new hire more carefully than in the past. No question about that."

The 157,000 jobs generated in May is good -- not fantastic-- but it does bode well for the hoped-for economic rebound in the current April-to-June quarter, Vitner and other analysts said.

Many economists believe the economy in the current quarter is growing at a pace of around 2.3 percent. Others think economic growth will top 3 percent. Either way, it would mark a considerable pickup from the anemic 0.6 percent growth rate registered in the January-to-March quarter, the worst in more than four years.

Federal Reserve chairman Ben Bernanke and his colleagues also are betting economic growth will perk up.

In another hopeful sign for the anticipated rebound, factories gained ground last month.

The Institute for Supply Management's manufacturing index rose to 55 in May, the best showing in a year. A reading above 50 indicates growth, while a reading below 50 indicates contraction.

On Wall Street, investors also were encouraged. The Dow Jones industrials gained 40.47 points to close at 13,668.11, the index's 26th record close for the year.

In the labor report, the performance was better than economists were expecting. They were forecasting that employers would add 135,000 jobs in May. They did, however, say they believed the overall unemployment rate would stay at 4.5 percent.

"Coming off a very weak first quarter . . . this stronger-than-expected job report is a welcome shot in the arm," said Bill Cheney, chief economist at John Hancock Financial Services.

The main reason the employment climate has been holding well through the economy's nearly yearlong period of sluggishness is because most of the weakness has been concentrated in the housing and automotive industries. Those problems spots haven't spread widely through the rest of the job market.

That said, those pockets of weakness are surely being felt.

In the first five months of this year, job growth averaged 133,000 a month, compared with 189,000 a month in 2006. And economists do expect the jobless rate will creep up this year, perhaps rising to as high as 5 percent by year end.

Workers saw modest wage gains. Average hourly earning rose to $17.30 in May, a 0.3 percent increase from the previous month. That matched economists" expectations. Over the last 12 months, wages grew by 3.8 percent.

Wage growth is important to workers and supports consumer spending, a vital ingredient to the economy's health. The modest wage increase alleviated some inflation fears. Workers, though, stung by the recent run-up in gasoline prices, may not feel their paychecks are growing as much as they would like.

Another report, released by the Commerce Department, showed consumer spending rose 0.5 percent in April, the biggest increase in two months.

Incomes dipped by 0.1 percent in April, a month when job and wage growth slowed.