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National economy losing steam with slow job growth

WASHINGTON - Cautious employers added just 75,000 new jobs in May, the fewest in seven months, in a fresh sign the national economy is losing momentum heading into summer.

Rising energy prices, higher borrowing costs and a cooling of the once red-hot housing market are the main forces shaping the slowdown in the country's overall economic activity. Those factors, along with sagging consumer confidence, are making companies wary of bulking up their payrolls in case the economy takes an unexpected turn for the worse, analysts said.

Taking a bit of the sting out of the sluggish job creation was the fact that the nation's unemployment rate dipped to 4.6 percent, the lowest in nearly five years.

Still, when the Labor Department's employment snapshot, released Friday, is viewed as a whole, it points to slower - not faster - economic speed ahead, analysts said. Wage growth also slowed, a development that may be disheartening to workers but comforted economists who worry about inflation taking off.

''The May employment report was weak in almost all dimensions,'' said Nigel Gault, economist at Global Insight.

Economic growth in the April-to-June quarter will probably clock in around a 2.5 percent pace or slightly better. That would mark a deceleration from the brisk 5.3 percent pace logged in the first quarter.

The count of new jobs generated last month was the smallest since October, when hiring practically stalled as the fallout from the Gulf Coast hurricanes jolted companies. It fell far short of the 170,000 new jobs economists had predicted.

Manufacturers, retailers, home builders, trucking firms, hotels and motels were among those shedding jobs last month. Financial firms, health care providers, educational services, accountants and bookkeepers, architects and engineers, and computer designers all boosted employment.

Job growth, which has been steadily weakening since February, was lower in March and April than previously reported. Employers added 175,000 jobs in March and another 126,000 in April - 37,000 fewer positions for both months combined than estimated a month ago.

''Firms have grown more cautious of taking on additional workers,'' said Stuart Hoffman, chief economist at PNC Financial Services Group.

On Wall Street, the Dow Jones industrials lost 12.41 points as investors wondered whether the economy was moderating too quickly.

In a brighter note, though, the unemployment rate dropped a notch from 4.7 percent in April to 4.6 percent in May, the lowest since July 2001.

The payrolls figure and the unemployment rate come from two different statistical surveys, which can provide - as in Friday's case - a somewhat conflicting picture of what is happening in the labor market.

The seasonally adjusted overall civilian unemployment rate - 4.6 percent in May - is based on a survey of 60,000 households. It showed that 288,000 people said they found employment last month, outpacing the number of people who couldn't find work.