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. Last Updated: 07/27/2016

U.S. Unemployment Rises to '94 Levels

WASHINGTON -- U.S. unemployment rose to a nearly nine-year high of 6.1 percent in May, but newly revamped payrolls data out Friday showed companies cut fewer workers than feared, spurring hopes for faster economic growth.

Payrolls fell a mild 17,000 in the month -- in contrast to expectations they would drop by 39,000. No workers were cut from payrolls in April, the Labor Department said, in a revision from the 48,000 drop it initially reported.

"The bad news appears to be getting less bad each month," said Bill Cheney, chief economist at John Hancock Financial Services in Boston. "With other economic indicators showing gradual but steady improvement, we may not be that far from seeing positive job growth again."

Stocks got an early lift from the jobs numbers but later turned mixed. The Dow Jones industrial average rose 21 points to end at 9,063 while the technology-laden Nasdaq fell 19 points to 1,627.

Bond prices slipped as traders scaled back expectations for a big rate cut at the next Federal Reserve policymaking meeting June 24 and 25.

Although a majority of analysts believe the central bank will still cut rates, most now bet on a quarter-point cut rather than the half-point move the Fed might have deemed necessary had the data been gloomier.

A Reuters poll of the top bond dealers who trade directly with the Fed found 18 out of 19 are calling for a cut in interest rates at the central bank's June policy meeting. The jobs report included a major overhaul of the way the government collects and calculates payrolls data and these revisions, on balance, depicted a stabilizing labor market.

The unemployment rate inched up one-tenth of a percentage point from April's 6 percent to its highest level since July 1994. The rate was unaffected by the revisions because it is calculated from a survey of households separate from the poll of businesses used for the payroll data.